Copper soars to levels not seen in two years on hopes for improving demand in ChinaBy AP
Wednesday, September 29, 2010
Copper at two-year high on hopes for better demand
Copper prices soared to levels not seen in two years Wednesday after a new report signaled the potential for improving demand in China, one of the world’s biggest consumers of the industrial metal.
Copper settled up 2.45 cents to $3.6615 a pound. Other metals and most energy contracts also rose.
Traders grew optimistic about copper’s prospects after HSBC’s China Purchasing Managers’ Index hit its highest level in five months, analysts said.
“The PMI figure, as well as other recent economic data out of China, suggest that economic growth in the country might be reaccelerating following signs of softening after tightening measures were implemented earlier in the year,” Dahlman Rose & Co. analyst Anthony B. Rizzuto stated in a client note.
The industrial metal is used in an array of products, from wiring and pipes for buildings to electronic consumer products.
Copper and most metals also have benefited recently from a weaker dollar. Since commodities are priced in dollars, a weaker dollar makes them more attractive to foreign buyers.
For copper and other industrial metals, a weaker dollar is an indication that the government may take additional steps to stimulate the economy. That, in turn, could boost manufacturing activity, said Dave Meger, vice president of metals trading at Vision Financial Markets.
For precious metals, a weaker dollar pushes up prices because more investors buy gold and silver for their reputation as safer assets in uncertain economic times.
“We are seeing the entire metals complex benefiting from the weakness in the dollar,” Meger said.
Gold for December delivery continued its record-setting pace, adding $2 to settle at $1,310.30 an ounce.
In other metals contracts, December silver rose 24.5 cents to settle at $21.952 an ounce, October palladium added $6.85 to settle at $567.30 an ounce and October platinum gained $13.70 to $1,649.40 a pound.
In other trading, grains prices retreated a second day as traders continued to take profits ahead of a key government report on the status of crops, which is expected to be released Thursday.
Wheat for December delivery fell 1.25 cents to settle at $6.8350 a bushel; December corn added 5 cents to $5.05 a bushel and November soybeans fell 11 cents to $10.99 a bushel.
Oil prices rose after the government reported inventories fell last week although supplies remained well above the five-year average.
Benchmark oil for November delivery gained $1.68 to settle at $77.86 a barrel on the New York Mercantile Exchange.
In other Nymex trading in October contracts, heating oil rose 6.6 cents to settle at $2.1905 a gallon and gasoline added 4.76 cents to $1.9955 a gallon.
Natural gas for November delivery settled 1.1 cents higher at $3.962 per 1,000 cubic feet on a day.