Metals News
BASE METALS: Copper Loses Steam Despite Upbeat Economic Data
industry news
10:50AM
Mar 28,2011
Source:SMM

NEW YORK, Mar 25, 2011 (Dow Jones Commodities News via Comtex) --    Copper's rally stalled Friday despite upbeat U.S. economic data and stronger equities markets.

The most actively traded contract, for May delivery, settled down 0.1%, or 0.55 cent, at $4.4190 per pound on the Comex division of the New York Mercantile Exchange.

The March delivery contract settled at $4.4085, up 0.55 cent, or 0.1%.

"This is almost an identical pattern to yesterday, and it's indicative of a market that's running out of steam," said Scott Meyers, senior trading analyst with Pioneer Futures.

Copper prices have gained 3.1% this week, on hopes of higher-than-forecast copper demand from Japan, as the world's third largest economy moves to rebuild from the March 11 earthquake and tsunami that sparked a nuclear crisis at the Fukushima Daiichi complex. Progress at taming the facility's damaged reactors has stoked hopes that the reconstruction effort could soon start.
But this week's price gains came on low trading volumes, which give each individual trade a larger influence on prices.

Open interest, or the total number of copper futures, also has fallen 18.8% from the start of the year, to 135,922 contracts Thursday.

Copper traders consider falling open interest a signal of weaker speculative appetite for the contracts.

"That would lend support to this move starting to lose steam," Meyers said.

Copper prices largely ignored the supportive influence of stronger U.S. economic data. The economy grew at a faster-than-expected inflation adjusted annual rate of 3.1% in the October to December period, the Commerce Department said. Economists surveyed by Dow Jones Newswires had expected a 3.0% growth rate.

Faster growth tends to benefit copper prices, as the red metal is widely used in manufacturing and construction, two key economic sectors.

The metal also bucked support from a stronger equities market, with the Dow Jones Industrial Average recently up 0.4%, or 52.1 points, at 12,222.7. The stock market is considered an indicator of economic health, and typically boosts copper prices as the metal is a key raw material in consumer electronics, construction and various other industries. 

 


 

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