Copper Traders See Glimmer of Hope in China Data-Shanghai Metals Market

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Copper Traders See Glimmer of Hope in China Data

Industry News 08:52:52AM Jul 10, 2012 Source:SMM

Jul 09, 2012 (Dow Jones) NEW YORK--Copper futures took a shine to China's inflation data, bucking a downward trend in equities, as investors hoped that slower inflation will free the government to pursue easier lending policies and new stimulus projects focused on low-cost housing.

China is the world's largest consumer of copper, accounting for about 40% of global consumption.

Copper prices finished Monday up 2.20 cents, or 0.7%, at $3.4315 a pound for the most active, September-delivery, contract on the Comex division of the New York Mercantile Exchange.

Some markets were chilled by Chinese Premier Wen Jiabao's weekend comments that his nation's economy was under "huge pressure to go downward." Equities spent much of Monday in retreat, with the Standard & Poor's 500 stock index recently trading down 0.2% at 1352.01.

But copper traders focused on Premier Wen's other remarks, like his endorsement of low-income housing projects, as a potential boon for the industrial metal. Residential construction is a major application for copper electrical wiring and plumbing pipes. 

This helped copper prices break ranks with stocks, even though both assets are sensitive to the global economic outlook.

Moreover, data showing China's inflation slowed to a two-and-a-half year low of 2.2% in June helped cement the upbeat outlook for the red metal.

"The inflation number in China does pave the way for additional easing," said Matt Zeman, head of trading at Kingsview Financial. "If there was more inflation, it becomes a lot harder for central banks to justify easing, but in this case it's a perfect scenario."

Beijing's efforts to cool growth were triggered by escalating food prices and concerns that speculation in real estate had puffed up home prices beyond reach of ordinary citizen in most of the country's major cities. These tightening policies, which included raising interest rates and bank reserve requirements, have been a drag on copper prices as investors anticipated reduced demand for the metal.

Copper settlements (ranges include electronic and pit trading):
Jul $3.4260; up 2.15 cents; Range $3.4000-$3.4280
Sep $3.4315; up 2.20 cents; Range $3.3965-$3.4375

 

Copper Traders See Glimmer of Hope in China Data

Industry News 08:52:52AM Jul 10, 2012 Source:SMM

Jul 09, 2012 (Dow Jones) NEW YORK--Copper futures took a shine to China's inflation data, bucking a downward trend in equities, as investors hoped that slower inflation will free the government to pursue easier lending policies and new stimulus projects focused on low-cost housing.

China is the world's largest consumer of copper, accounting for about 40% of global consumption.

Copper prices finished Monday up 2.20 cents, or 0.7%, at $3.4315 a pound for the most active, September-delivery, contract on the Comex division of the New York Mercantile Exchange.

Some markets were chilled by Chinese Premier Wen Jiabao's weekend comments that his nation's economy was under "huge pressure to go downward." Equities spent much of Monday in retreat, with the Standard & Poor's 500 stock index recently trading down 0.2% at 1352.01.

But copper traders focused on Premier Wen's other remarks, like his endorsement of low-income housing projects, as a potential boon for the industrial metal. Residential construction is a major application for copper electrical wiring and plumbing pipes. 

This helped copper prices break ranks with stocks, even though both assets are sensitive to the global economic outlook.

Moreover, data showing China's inflation slowed to a two-and-a-half year low of 2.2% in June helped cement the upbeat outlook for the red metal.

"The inflation number in China does pave the way for additional easing," said Matt Zeman, head of trading at Kingsview Financial. "If there was more inflation, it becomes a lot harder for central banks to justify easing, but in this case it's a perfect scenario."

Beijing's efforts to cool growth were triggered by escalating food prices and concerns that speculation in real estate had puffed up home prices beyond reach of ordinary citizen in most of the country's major cities. These tightening policies, which included raising interest rates and bank reserve requirements, have been a drag on copper prices as investors anticipated reduced demand for the metal.

Copper settlements (ranges include electronic and pit trading):
Jul $3.4260; up 2.15 cents; Range $3.4000-$3.4280
Sep $3.4315; up 2.20 cents; Range $3.3965-$3.4375