Copper Futures Extend Five-Month Highs on Demand Optimism

Strategic Insights -

Copper futures rallied to five-month highs on Thursday, driven by a combination of factors including a substantial drop in inventories and a bullish stock market. May copper futures gained 7.25 cents, or 3.6%, to settle at $2.0710 a pound on the Comex division of the New York Mercantile Exchange. The contract extended its highest point since October 29 to $2.0795, with market participants becoming increasingly optimistic about government stimulus packages.

Key Takeaways:

  • Copper futures extended five-month highs to $2.0795, with May copper gaining 7.25 cents, or 3.6%, to settle at $2.0710 a pound.
  • Equities rallied, with the Dow Jones Industrial Average up 181.83 points, supporting metals across the board.
  • Participants are optimistic about government stimulus packages, with Ralph Preston stating, "the power of the bureaucrats to unlock the wheels of credit."
  • Charles Nedoss, senior account manager and metals analyst with Peak Trading Group, noted that market participants are watching stock markets as indicators of the global economy.
  • Copper is widely used in construction, electronics, and automobiles, responding positively to bullish economic news.
  • Inventories of copper stored in London Metal Exchange warehouses fell 7,425 metric tons, leaving them at 496,775, indicating expectations of continued shipments to China.

Statistics:

  • May copper futures gained 7.25 cents, or 3.6%, to settle at $2.0710 a pound.
  • The contract extended its highest point since October 29 to $2.0795.
  • Inventories of copper stored in London Metal Exchange warehouses fell 7,425 metric tons.
  • The Dow Jones Industrial Average was up 181.83 points.
  • The most recent Comex inventory data, released late Wednesday, were up 128 short tons at 47,245 short tons.

Sources:

  • Dow Jones Commodities News via Comtex, April 9, 2009
  • Sterling Smith, Vice President, FuturesOne
  • Ralph Preston, Senior Market Analyst, Heritage West Financial
  • Charles Nedoss, Senior Account Manager and Metals Analyst, Peak Trading Group
  • George Gero, Vice President, RBC Capital Markets Global Futures
  • Matt Whittaker, Dow Jones Newswires, via Bloomberg.