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BASE METALS: Copper Hits 2-Week High On EU Crisis Plan Hopes
Oct 13,2011 08:38CST
industry news
Source:SMM
Copper futures climbed Wednesday as investors moved to growth-sensitive assets on hopes that the latest plan to stem the euro zone's debt crisis would stave off a credit crunch in the currency union.

Oct 12, 2011 NEW YORK (Dow Jones)--Copper futures climbed Wednesday as investors moved to growth-sensitive assets on hopes that the latest plan to stem the euro zone's debt crisis would stave off a credit crunch in the currency union.

Copper for December delivery, the most actively traded contract, settled up 10.30 cents, or 3.1%, at $3.3935 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement since Sept. 27.

The European Commission laid out a plan Wednesday to shore up Europe's rattled financial institutions, proposing continued emergency lending to cash-strapped Greece as well as an accelerated timetable for deploying the euro-zone rescue fund.

The news sent investors toward growth-sensitive commodities and equities markets, many of which had fallen sharply as worries about the stability of Europe's financial situation mounted in recent months.

"A weaker dollar and better risk appetite in most asset classes helped to fuel sentiment" in metals markets, traders with RBC Capital Markets said in a note. They warned, however, that any negative turn in Europe could just as easily spark a reversal in copper prices.

A weaker dollar can give dollar-denominated copper a boost by making the futures cheaper for buyers using other currencies.

Copper came under intense selling pressure in September, reaching a series of 14-month lows on worries that Europe's financial struggles would shake the world's industrial economy. Futures were also under pressure from the view that global manufacturing activity was slowing.

Copper is sensitive to the growth outlook because of its widespread uses in construction and manufacturing.

Futures fell Tuesday on investor jitters ahead of a vote in Slovakia on a proposed expansion of the European Union bailout fund. Despite an initial rejection by Slovakia's parliament late Tuesday, the country is still widely expected to give final approval to the fund.

Some market participants say Asian buyers have started to take advantage of the recent price plunge.

"Two leading physical trading firms in China told us last week that it is very difficult to buy copper within Asian markets following the recent drop" because of tight supplies, analysts with Standard Chartered said in a note to clients.

Anecdotal reports suggest that copper warehouse stockpiles in Asia were declining, analysts said, signs that Chinese buyers may be moving to restock their low inventories. Chinese September trade data are scheduled for release Thursday.

On the London Metal Exchange Wednesday, benchmark copper for delivery in three months rose 3.2% to $7,525 a metric ton.

Shanghai Futures Exchange copper futures fell 1.5% on Wednesday, mirroring the declines in London and New York markets from the previous day.

Copper settlements (ranges include electronic and pit trading):
Oct $3.3905; up 10.30 cents; Range $3.3000-$3.3915
Dec $3.3935; up 10.30 cents; Range $3.2385-$3.4115

 

copper; euro zone's debt crisis

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