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BASE METALS: Weak Dollar, Bargain Hunters Lift Comex Copper
Aug 22,2011 08:54CST
industry news
Source:SMM
Copper futures recovered from recent declines as a weaker dollar lured bargain hunters to the market.

Aug 19, 2011 NEW YORK (Dow Jones)--Copper futures recovered from recent declines as a weaker dollar lured bargain hunters to the market.

The most-actively traded contract, for September delivery, was recently up 4.10 cents, or 1%, at $4.0070 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper was up 2.30 cents, or 0.6%, at $3.9875 a pound.

The dollar slipped against a trade-weighted basket of currencies, with the ICE Dollar Index recently at 73.693, down from 74.244 late Thursday in New York. Dollar-denominated copper futures appear cheaper to buyers who hold foreign currencies when the dollar weakens.

Copper prices have wobbled around the $4 level since a 12% correction at the start of August, with some investors returning to the market Friday to purchase copper at recently reduced prices.

A glimmer of hope came from weekly Shanghai Futures Exchange copper inventory data, which showed its first decline in four weeks. Copper inventories fell 8,805 tons to 112,014 tons Friday.

The inventory draw "points to the pick-up in Chinese demand in light of the recent price weakness," said Leon Westgate, base metals analyst with Standard Bank in London. "The data also [are] lending support to anecdotal reports that bonded stocks have also come back under pressure, after gaining during July and early August."

China is the world's largest copper consumer, accounting for more than a third of global demand for the metal. Copper is widely used in construction and manufacturing, two economic sectors that have been booming in China.

However, copper's prospects are muted by fears of a global economic slowdown which stands to retard demand for the metal used in electrical wiring and copper plumbing.

"As long as talk of a global recession is in the cards it's very hard to be bullish copper," said Adam Klopfenstein, senior market strategist with MF Global.

"Copper is going to be stuck in a $3.90 to $4.10 range for the next few months, until we get a firm grasp of where the global economy is going," he added.

 

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