May 01, 2012 NEW YORK (Dow Jones)--Copper futures settled at a four-week high on Tuesday, gaining for a sixth consecutive session after a surprisingly strong reading on the health of the U.S. manufacturing sector lifted the demand outlook for the industrial metal.
The most actively traded copper contract, for July delivery, rose 1.40 cent, or 0.4%, to settle at $3.8435 a pound on the Comex division of the New York Mercantile Exchange, the highest ending price since April 3.
The Institute for Supply Management's reading on U.S. manufacturing showed activity accelerated in April, bucking expectations for slowing growth. ISM's manufacturing purchasing-managers index came in at 54.8 in April, up from 53.4 the previous month. Economists were expecting a reading of 52.9. Readings above 50 indicate expanding manufacturing activity.
Prices for copper, used widely in construction and manufacturing, are sensitive to shifts in the economic outlook. Strength in the U.S. manufacturing sector can foreshadow higher demand.
The reading propped up bullish sentiment in the copper market, RBC Capital Markets said in a note, "as there had been concerns (that) recent data were showing a topping out of U.S. economic activity."
The U.S. data also provided some relief to the copper bulls after China's official gauge of nationwide manufacturing activity, released on Tuesday fell short of economists' estimates. The Purchasing Managers Index rose to 53.3 during the month from 53.1 in March. Economists were expecting a reading of 53.5.
News from China tends to hold heavy sway in copper prices, as the country accounts for about 40% of world consumption.
"Not surprisingly, the cross-currents evident in the report did not do much to boost the markets," said Edward Meir, an analyst with INTL FCStone, in a note.
But Tuesday's China reading wasn't enough to derail the copper market's recent modest upward momentum. Futures' winning streak has come on the combination of a weakening dollar, hopes for more Federal Reserve stimulus for the economy, and a tight physical market even as growth in top consumer China disappoints.
The copper market again saw thin trading on Tuesday with many trading desks in China and Europe thinly staffed for May 1 holidays.
Copper settlements (ranges include electronic and pit trading):
May $3.8400; up 0.65 cents; Range $3.8170-$3.8550
Jul $3.8435; up 1.40 cents; Range $3.8120-$3.8555