Jan 10, 2012 NEW YORK (Dow Jones)--Copper futures climbed to a one-week high on Tuesday after record monthly imports to top consumer China raised hopes that demand for the industrial metal would hold up despite the headwinds from Europe's debt crisis.
China imported 508,942 metric tons of copper in December, surprising many market watchers who had expected a decline from November's levels. The import total rose 13% on the month and was up 48% from 2010 levels, General Administration of Customs data showed.
Analysts said imports were likely buoyed by opportunistic buying after the late-summer plunge in global copper prices, but the data still boosted hopes that the economic engine that drove copper prices to record highs last year would remain in gear in 2012.
The most actively traded copper contract, for March delivery, rose 9.70 cents, or 2.8%, to settle at $3.513 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since Jan. 3.
"The copper imports number was good, and seems to be improving," said Bill O'Neill, principal with commodities firm Logic Advisors. "When you combine that with some of the comments from Alcoa about metals demand in general, I think copper benefited from that as well."
Alcoa Inc. (AA), the top U.S. aluminum maker, said on Monday that it expected Chinese demand for the lightweight metal to grow by 12% in 2012.
Worries that economic growth in China was slowing helped knock copper prices off record highs reached early in 2011. During the year, the country's copper imports fell 5.1%.
China accounts for about 40% of world consumption of the metal, which is used in everything from wiring and plumbing to electronics and automobiles.
Copper "demand growth remains healthy," analysts with RBS said in a note. "Consumption in mature economies will likely slow, but most of the growth forecast for the next few years is still expected to come from China, where demand is holding up well."
Copper futures held their early gains Tuesday through European and U.S. trading as a reading on French industrial production came in better than expected and a Fitch Ratings representative said the country's credit rating isn't expected to be downgraded.
But the copper market remains vulnerable to a pullback, analysts said, as concerns linger that Europe's financial system could be poised for further turmoil. Copper's 23% decline in 2011 came in large part as investors bet that the euro-zone debt crisis would filter through the industrial economy and curb metals demand worldwide.
"It remains to be seen whether the bounce we are currently seeing in metals will have some legs to it," said Edward Meir, an analyst with INTL FCStone, in a note. "Euro-related bond fears are not far underneath the surface and still have the capability of snuffing out this rally."
Copper settlements (ranges include electronic and pit trading):
Jan $3.5100; up 9.75 cents; Range $3.4065-$3.5100
Mar $3.5130; up 9.70 cents; Range $3.4040-$3.5175