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Comex Copper Rises on U.S. Data, China-Easing Hopes

iconAug 17, 2012 09:30
Source:SMM
Copper futures gained Thursday, as hopes that U.S. home-building data and reassuring comments from leaders in Europe and China pointed to steady demand for copper.

Aug 16, 2012 (Dow Jones) NEW YORK--Copper futures gained Thursday, as hopes that U.S. home-building data and reassuring comments from leaders in Europe and China pointed to steady demand for the industrial metal.

The most actively traded contract, for September delivery, rose 3.3 cents, or 1%, to settle at $3.3825 a pound on the Comex division of the New York Mercantile Exchange.

Copper's gains also came amid some mixed data from the world's largest economy. U.S. home building slipped in July after a strong gain in June, but new permits rose to a four-year high, potentially pointing to higher demand ahead from the copper-intensive sector. Also Thursday, the Federal Reserve Bank of Philadelphia reported that Mid-Atlantic manufacturers say business conditions improved in August, though they remain in contractionary territory.

The housing starts data, in particular, was the impetus for the rally in copper and other metals, traders with RBC Capital Markets said in a note.

Copper also tracked the euro higher as the European common currency gained against the U.S. Dollar after German Chancellor Angela Merkel said her country was committed to doing what it can to maintain the euro.

Commodities have been pressured by worries about Europe's debt crisis this year, as further tremors there could disrupt global trade and limit demand. Copper is used in power cables, plumbing, appliances and consumer electronics, among other applications. As a result, the copper market tends to react quickly to shifts in the economic-growth outlook.

Copper futures had traded higher before Ms. Merkel's comments, as a statement from another world leader bolstered investor appetite for commodities and other growth-sensitive assets.

In comments posted on the central government's website, Chinese Premier Wen Jiabao said on Wednesday that there is "growing room for monetary-policy operation," indicating that Beijing may act in an effort to boost economic growth.

China accounts for about 40% of world copper consumption, and stimulus measures could lift demand in copper-heavy industries. Slower growth in China this year has kept a lid on copper prices.

Still, copper and other commodities could struggle to hold their gains if world governments and central banks remain reluctant to announce new support for the economy, analysts said.

"Market sentiment remains negative towards the global growth environment," said Gayle Berry, an analyst with Barclays, in a note. "Until there is effective policy responses, the markets appear to be waiting to see, and therefore it is likely prices will remain under pressure."

Copper settlements (ranges include electronic and pit trading):
Sep $3.3825; up 3.30 cents; Range $3.3415-$3.3870
Dec $3.3935; up 3.25 cents; Range $3.3530-$3.3980

       
 

Comex copper prices
copper demand
US data
China easing hopes

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