BASE METALS: Comex Copper Rises Above $4 As Rebound Continues

NEW YORK, May 18, 2011 (Dow Jones Commodities News via Comtex) --Copper futures ended above $4 a pound Wednesday for the first time in more than a week on indications that steep price declines have boosted demand for the industrial metal.

The most actively traded contract, for July delivery, settled 10.65 cents, or 2.7%, higher, at $4.105 a pound on the Comex division of the New York Mercantile Exchange, the highest ending price since May 10.

The thinly traded May contract ended up 2.7% at $4.0995 a pound.

Futures have ended higher for five consecutive sessions, pushed higher by speculation that the declines spurred an uptick in demand and by stability in currency markets.

The widespread risk fears that hit commodities earlier this month and pushed copper to six-month lows was triggered in part by a rising greenback, which can curb the appeal of dollar-denominated commodities by making them more expensive for market participants using other currencies.

The dollar's rise stalled this week, lending some stability to the copper market. The ICE U.S. Dollar Index, which tracks the currency against a basket of major U.S. trading partners, was at 75.318 at the close of Comex floor trading, down from 75.399 late Tuesday in New York.

Gains in other commodities also lifted sentiment in the copper market Wednesday, said Charles Nedoss, a broker and analyst with Olympus Futures.

"We're seeing crude oil go back up to the $100 (a barrel) mark, and grains are going higher," Nedoss said. "Those are two proxies for growth."

But lingering worries about a slowdown in the global economy could keep pressure on copper prices. The industrial metal is sensitive to changes in the growth outlook because of its widespread use in construction and manufacturing.

"As long as the world economies continue on a road of growth we may see copper get to $4.30 or so, but I'm not seeing it catch on fire yet," said Ira Epstein, director of the Ira Epstein division of the Linn Group.

Recent readings on the U.S. housing and manufacturing sectors have come in worse than expected, and China's efforts to keep its economy from overheating has triggered speculation that the country's demand for raw materials will weaken.

China is the world's largest copper consumer and a driver of global metals prices. Signs of increased physical buying there this week has lent support to copper, analysts said, but traders are keeping a close watch for signs that the country's appetite for raw materials is slowing.

Copper futures on the Shanghai Futures Exchange ended higher Wednesday on low volume, with some traders content to stay on the sidelines amid continued uncertainty in commodity markets. Benchmark three-month copper on the London Metal Exchange also rose, supported by bargain buying and weakness in the dollar.

Copper settlements (ranges include electronic and pit trading):
May  $4.0995; up 10.85 cents; Range $4.0160-$4.1060
July $4.1050; up 10.65 cents; Range $4.0230-$4.1155