Copper Futures Surge to Highest Level of the Year

Strategic Insights -

A robust tone in equities and strong Chinese import data propelled copper futures to their highest level of the year on Monday, with most-active May copper settling at $1.8410 per pound on the Comex division of the New York Mercantile Exchange. The copper price hit a peak of $1.8750, its strongest level since November, as analysts cited improved optimism about the economy and Chinese demand as key drivers.

Key Takeaways:

  • May copper futures rose 4.50 cents to settle at $1.8410 per pound on the Comex division of the New York Mercantile Exchange, the highest level of the year.
  • The strong Chinese import data reported overnight, with China's imports of refined copper nearly doubling to 270,948 metric tons in February compared to the same month last year.
  • The improved optimism about the economy was also driven by a stronger-than-forecast U.S. report on existing-home sales, with sales climbing 5.1% to an annual rate of 4.72 million.
  • Chinese demand is expected to support copper prices, with "musings" suggesting that China will be buying even more copper in the coming months.
  • The copper market remains well off from its 2008 peak, which topped $4 a pound for spot-month metal, but experts believe that Chinese buying alone cannot sustain the market.
  • Steps to boost the economy, such as the Federal Reserve's monetary and quantitative easing, have played a major role in the copper market's recent rally.
  • Analysts predict that the futures have helped by the Fed's programs, which could ultimately provide demand for base metals generally.

Statistics:

  • May copper futures rose 4.50 cents to settle at $1.8410 per pound on the Comex division of the New York Mercantile Exchange.
  • Chinese imports of refined copper in February nearly doubled to 270,948 metric tons.
  • U.S. existing-home sales climbed 5.1% to an annual rate of 4.72 million.
  • The Dow industrials rose over 300 points before copper closed.
  • Hong Kong's Hang Seng Index added 4.8% on the day.
  • Inventories of copper stored in London Metal Exchange warehouses rose 4,375 metric tons on Monday.

Sources:

  • Dow Jones Commodities News via Comtex
  • [2] Allen Sykora, Of Dow Jones NewsWires
  • Frank Lesh, Broker and Futures Analyst, FuturePath Trading
  • Bart Melek, Global Commodity Strategist, BMO Capital Markets
  • [4] Barclays Capital Research Note