DJ BASE METALS: NY Copper Gains On US Durable Goods Report

Aug 24, 2011 NEW YORK (Dow Jones)--Copper futures ended with slight gains Wednesday as traders viewed an upbeat reading on U.S. factory orders as an opportunity to buy the industrial metal.

The most actively traded copper contract, for September delivery, rose 0.2 cent, or 0.1%, to settle at $3.998 a pound on the Comex division of the New York Mercantile Exchange.

Futures have shown little consistent direction this week, shuffling between small gains and losses near the $4 mark as traders sought clarity on the economic outlook following the widespread market turmoil earlier this month.

The benchmark contract slid from near $4.50 a pound to below $3.90, as a weaker global growth outlook and rattled stock markets caused traders to reassess copper-demand expectations.

Quiet trading is expected to continue ahead of Friday's speech by Federal Reserve Chairman Ben Bernanke at the bank's annual retreat in Jackson Hole, Wyo. Market participants are likely to scrutinize his comments for his view of the economic outlook, as well as potential steps the central bank could take to reassure markets.

In the meantime, copper market participants have looked to equities and economic indicators for trading cues. The market received a boost Wednesday from a report showing U.S. demand for long-lasting manufactured goods rebounded in July. Orders for factory goods rose by 4% from the prior month, the Commerce Department said Wednesday, beating economists' expectations for a 2% rise.

Copper is sensitive to such economic indicators because of its widespread uses in wiring and plumbing in appliances, cars and trucks, and consumer electronics, among other applications.

"This morning's durable goods number was a bit supportive," said Sterling Smith, a market analyst with Country Hedging. Copper "seems to be well supported between $3.95 and $4.05 as long as we don't see any problems with the equity market."

The global refined copper market was in an 80,000-ton deficit in May, the International Copper Study Group said Wednesday. The ICSG estimates that during the first five months of the year, production fell short of demand by 146,000 tons.

Copper prices have been supported for much of the last year by the view that supply from mines wouldn't grow quickly enough to meet demand.

Copper settlements (ranges include electronic and pit trading):
Aug $3.9970; up 0.25 cent; Range $3.9970-$4.0010
Sep $3.9980; up 0.20 cent; Range $3.9655-$4.0310