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Copper Futures Rally on Optimism about Demand and Economic Recovery

Strategic Insights

— 2 min read

Copper futures surged on Tuesday, driven by growing investor optimism about demand for the industrial metal. The rally came as strong earnings from aluminum company Alcoa Inc. boosted the stock market and eased concerns about euro-zone sovereign debt, while the economic recovery also fueled increased demand for aluminum and copper. The price of copper futures for March delivery rose 8.45 cents, or 2%, to settle at $4.3490 a pound on the Comex division of the New York Mercantile Exchange.

Key Takeaways:

  • Copper futures rallied 8.45 cents, or 2%, to settle at $4.3490 a pound on Tuesday, driven by growing investor optimism about demand for the industrial metal.
  • The rally came as strong earnings from aluminum company Alcoa Inc. boosted the stock market and eased concerns about euro-zone sovereign debt.
  • Aluminum, like copper, is an industrial metal used throughout the supply chain, and prices for both have been helped by the economic recovery.
  • Frank Lesh, a broker and analyst at FuturePath Trading, said "If you need aluminum, you're going to need copper too. It speaks of an improving economic situation."
  • Equities were also bolstered after European Central Bank euro-area government bond purchases eased some concerns about European sovereign debt woes.
  • Japanese Finance Minister Yoshihiko Noda stated that Tokyo may buy more than 20% of the securities issued by the European Financial Stability Facility in its initial round.
  • Inventories of copper stored in London Metal Exchange warehouses rose 1,350 metric tons on Tuesday, leaving them at 379,650.
  • As of January 7, 2011, the latest Comtex SmarTrend Alert indicated an uptrend on aluminum (AA) stock starting from September 23, 2010, at a price of $11.82.

Statistics:

  • Copper futures price for March delivery rose 8.45 cents, or 2%, to settle at $4.3490 a pound on the Comex division of the New York Mercantile Exchange.
  • The Dow Jones Industrial Average was recently up 0.3% after Alcoa's late Monday report of a fourth-quarter profit.
  • Alcoa's expected demand for the quarter was strong, and aluminum prices have been helped by the economic recovery.
  • Inventories of copper stored in London Metal Exchange warehouses rose 1,350 metric tons on Tuesday, leaving them at 379,650.
  • As of January 7, 2011, the latest Comtex SmarTrend Alert indicated an uptrend on aluminum (AA) stock starting from September 23, 2010, at a price of $11.82.

Sources:

  • Dow Jones Commodities News via Comtex
  • Alcoa Inc.
  • European Central Bank
  • Japanese Finance Minister Yoshihiko Noda
  • Comtex News Network, Inc.
  • Dow Jones Newswires
  • Matt Whittaker, Dow Jones Newswires
  • Comtex SmarTrend Alert
  • www.mysmartrend.com

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