Copper Prices Rally as Market Participants Reassess Demand Amid Libya Crisis

Strategic Insights -

Copper prices surged significantly as investors began to believe that the impact of higher oil prices on demand would be minimal. The March delivery contract on the Comex division of the New York Mercantile Exchange rose 10.95 cents, or 2.5%, to settle at $4.4360 a pound. Analysts cited concerns about the potential for overreaction in the market, as well as forecasts for a copper-market deficit of up to 825,000 tons this year. Market participants also noted the steadying of oil prices and the expected uptick in demand for copper.

Key Takeaways:

  • Copper prices rallied 10.95 cents, or 2.5%, to settle at $4.4360 a pound on the Comex division of the New York Mercantile Exchange.
  • Analysts cited concerns about the potential for overreaction in the market, with Ira Epstein, director of the Ira Epstein division of the Linn Group, stating, "Even with all the oil crisis, the world's not ending."
  • Market participants also noted the steadying of oil prices, with Nymex April crude rising 11 cents to $97.39 a barrel.
  • The Shanghai Futures Exchange reported a weekly decline of 2,961 metric tons of copper inventory to 158,101.
  • The Comex reported an increase of 1,103 short tons in copper inventory, bringing the total to 82,256 short tons.

Statistics:

  • Copper prices rose 10.95 cents, or 2.5%, to settle at $4.4360 a pound on the Comex division of the New York Mercantile Exchange.
  • Nymex April crude rose 11 cents to $97.39 a barrel.
  • The Shanghai Futures Exchange reported a weekly decline of 2,961 metric tons in copper inventory.
  • Comex reported an increase of 1,103 short tons in copper inventory.
  • Forecasted copper-market deficit of up to 825,000 tons this year.

Sources:

  • Dow Jones Commodities News via Comtex (February 25, 2011)
  • OptionSellers.com (Michael Gross, broker and futures analyst)
  • The Linn Group (Ira Epstein, director of the Ira Epstein division)