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Copper Futures Surge Above $3 a Pound

Strategic Insights

— 1 min read

Copper prices continued their upward trend, breaking resistance at $3 a pound, as a weaker dollar, stronger equities, and labor issues supported the metal. The December contract settled at $3.0360 a pound, its strongest point since September 2008. The market's rally was notable, given that the metal rose despite an inventory build, with London Metal Exchange warehouses reporting a 5,275 metric ton increase, and Comex inventory data showing a 373 short ton increase. The weaker dollar, with the euro moving above $1.50, also contributed to the metal's surge, according to Bill O'Neill, a principal with LOGIC Advisors.

Key Takeaways:

  • Copper futures settled above the $3-a-pound resistance, with the December contract gaining 10.4 cents, or 3.5%, to settle at $3.0360 a pound.
  • The market's rally was supported by a weaker dollar, stronger equities, and labor issues, with workers at the BHP Billiton Ltd.'s Chilean Spence copper mine continuing their strike into a ninth day.
  • Investment demand remained key, with O'Neill citing the ongoing benefits from money flow factors, currency factors, and demand for commodities as an asset class.
  • Copper's rally was notable because the metal rose strongly in spite of an inventory build, with London Metal Exchange warehouses reporting a 5,275 metric ton increase and Comex inventory data showing a 373 short ton increase.
  • Higher equities also helped copper, with the Dow Jones Industrial Average up 33.86 points at 10,075.34 shortly after copper closed.
  • Labor issues, including the ongoing strike at the Chilean Spence copper mine, provided a background of support for copper, according to O'Neill.

Statistics:

  • December copper futures gained 10.4 cents, or 3.5%, to settle at $3.0360 a pound.
  • The market's strongest point since September 2008.
  • London Metal Exchange warehouses reported a 5,275 metric ton increase in copper inventories.
  • Comex inventory data showed a 373 short ton increase in copper inventory.
  • The Dow Jones Industrial Average was up 33.86 points at 10,075.34 shortly after copper closed.

Sources:

  • Dow Jones Commodities News via Comtex
  • LOGIC Advisors - Bill O'Neill
  • Heritage West Financial - Ralph Preston
  • OptionSellers.com - Michael Gross
  • BHP Billiton Ltd. (BHP)

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