Copper Pushes To One-Month High On Demand View

Jan 11, 2012 NEW YORK (Dow Jones)--Copper futures rose on Wednesday, settling at a one-month high on hopes that firm global demand for the metal would outweigh the drag from Europe's faltering economy.

The most actively traded copper contract, for March delivery, rose 3.3 cents, or 0.9%, to settle at $3.546 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since Dec. 9.

"A lot of the worries that were on the table in the second half of 2011 have abated somewhat, despite continued rumbling out of Europe," said Michael Gross, a commodities trader and analyst with OptionSellers.com.

Copper climbed by 2.8% on Tuesday after data showed imports to China unexpectedly climbed to a record high in December. China accounts for 40% of global copper demand, and worries that the country's growth was slowing played a large role in knocking copper prices off last year's record highs.

Recent signs of economic strength in the U.S., from the housing to labor and manufacturing sectors, have also underpinned copper prices.

Copper is sensitive to the growth outlook because of its use in wiring, plumbing, automobiles and consumer electronics.

Analysts said this week's gains in copper were also fueled by the annual shift in the holdings of index funds designed to track commodity prices. The adjustments officially began Monday and end Friday.

Morgan Stanley analysts estimate that the copper's increased role in the Dow Jones-UBS Commodities Index would lead funds tracking that benchmark to buy a combined 7,238 Comex copper contracts, equal to about 6% of the total contracts outstanding in the market at the end of 2011.

Copper futures were in negative territory earlier on Wednesday after disappointing economic data from Spain and Germany reinforced the view that Europe's economy was slowing.

Fitch Ratings warned that the European Central Bank needs to do more to prevent the collapse of the euro, a day after overnight deposits with the central bank reached a record high as banks remain cautious about lending money.

"The recovery road ahead looks certainly bumpy, and additional (price) weakness is not ruled out," but growth in metals demand should stabilize during the first half of the year, Barclays Capital analyst Roxana Mohammadian-Molina said in a note.

Copper settlements (ranges include electronic and pit trading):
Jan $3.5415; up 3.15 cents; Range $3.4875-$3.5435
Mar $3.5460; up 3.30 cents; Range $3.4705-$3.5565