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Copper Futures Rise on Robust Chinese Economic Data

Strategic Insights

— 1 min read

Copper futures surged on Friday following the release of strong economic data from China, including record exports and imports, a trade surplus, and increasing property prices. The robust economic data from China, which consumes over 40% of the world's copper production, added to growing optimism about the global economy. Meanwhile, a settlement above $4.1005 would be a record, with the most-actively traded copper contract for March delivery up 3.35 cents, or 0.8%, at $4.1205 a pound on the Comex division of the New York Mercantile.

Key Takeaways:

  • China's November imports of copper, copper alloy, and semi-finished products rose 21% compared to last November at 351,597 tons.
  • The Chinese economic data indicates a strong demand for copper from a nation that already consumes some 40% of the world's production.
  • The strong Chinese data, combined with positive sentiment from recently muscular manufacturing data, rising U.S. exports, retail sales, and consumer confidence, add to economic optimism.
  • China's central bank raised banks' reserve requirement ratio by 0.50 percentage points, aimed at stemming inflationary pressures, but this move can be neutralized by potential interest rate hikes.
  • Warehouse stocks of copper continue to drop, with London Metal Exchange warehouses holding 348,625 tons, a decrease of 825 metric tons from Friday.
  • A physically backed copper exchange-traded fund, backed by ETF Securities, began trading on the London Stock Exchange, increasing expectations of further tightening of copper supplies.

Statistics:

  • Copper futures rose 3.35 cents, or 0.8%, at $4.1205 a pound on the Comex division of the New York Mercantile.
  • China's November imports of copper, copper alloy, and semi-finished products rose 211% compared to last November.
  • The most recently traded copper contract saw a weekly decline of 833 metric tons to 115,964.
  • London Metal Exchange warehouses held 348,625 tons of copper.
  • The Comex inventory data, released late Thursday afternoon, was down 296 short tons at 68,077 short tons.

Sources:

  • Dow Jones Commodities News via Comtex (December 10, 2010)
  • MF Global (analyst Edward Meir)
  • Dow Jones Newswires (Matt Whittaker, 212-416-2139)

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