Copper Futures Rise Despite Disappointing Economic Data

Strategic Insights -

A surge in optimism about the global economic outlook helped copper futures advance despite disappointing durable goods and jobs data. The March copper contract on the Comex division of the New York Mercantile exchange rose 8.1 cents, or 1.9%, to $4.3480 a pound. Industry experts attributed the positive sentiment to a superior supply and demand situation, with limited metal availability and strong demand for the industrial metal expected to outstrip supply this year.

Key Takeaways:

  • Copper futures rose 8.1 cents, or 1.9%, to $4.3480 a pound on the Comex division of the New York Mercantile exchange.
  • Industry experts, such as Bill O'Neill from LOGIC Advisors, attribute the positive sentiment to a superior supply and demand situation, with limited metal availability.
  • Demand for copper is expected to outstrip supply this year as the global economic recovery gains steam.
  • The Federal Reserve's suggestion that the country's economic picture is slowly improving boosted hopes for stronger U.S. demand for base metals.
  • An increase in U.S. new home purchases also contributed to the positive outlook, as base metals are widely used in construction.
  • Caterpillar Inc.'s Q4 earnings soared, driven by demand recovery in developing countries and improved economies in North America and Europe.
  • Steelmaker Nucor Corp. expects to return to profitability in the current quarter, fueled by recent price increases for its steel-mill products.

Statistics:

  • Copper futures rose 8.1 cents, or 1.9%.
  • March copper contract price: $4.3480 a pound.
  • Inventories of copper stored in London Metal Exchange warehouses: 397,275 metric tons.
  • Initial jobless claims rose by 51,000 to 454,000 in the week ended Jan. 22.
  • U.S. durable goods orders decreased by 2.5%, missing economists' expectation of a 1.4% gain.

Sources:

  • Dow Jones Commodities News via Comtex
  • LOGIC Advisors (Bill O'Neill)
  • Federal Reserve
  • Caterpillar Inc.
  • Nucor Corp.
  • Dow Jones Newswires (Matt Whittaker)