Copper Prices Surge on Improved Demand Outlook

Strategic Insights -

Copper futures are sharply higher on Wednesday as company earnings and strong economic growth foster a more positive outlook for the metal's demand. The world's largest publicly traded copper producer, Freeport-McMoRan Copper & Gold Inc., reported a significant increase in second-quarter profit that exceeded analysts' expectations. The improved earnings have bolstered investor confidence, leading to increased interest in industrial commodities. Copper prices often track with equities as a proxy for economic health, and the metal's use in construction and electronics has made it a key indicator of the global economy's performance.

Key Takeaways:

  • Copper futures rose 8.4 cents, or 2.8%, to $3.087 a pound on the Comex division of the New York Mercantile Exchange.
  • Freeport-McMoRan Copper & Gold Inc.'s profit rose 2.5% from year-earlier levels, beating analysts' expectations.
  • The global supply and demand outlook for copper remains bullish, with the world's largest copper consumer, China, importing 211,957 metric tons of refined copper in June.
  • Inventories of copper stored in London Metal Exchange warehouses fell 1,975 metric tons, leaving them at 417,625 metric tons.
  • The world refined copper market was in a 60,000-metric-ton deficit in April, but after seasonal adjustments, the market was in a surplus of about 30,000 tons.
  • China's copper imports declined 44% in June and 24% in the month, while imports in the first half of 2010 decreased 13% on the year to 1.56 million tons.
  • The World Bureau of Metal Statistics reported a global copper market surplus of 73,000 metric tons in the first five months of 2010.

Statistics:

  • Copper futures rose 2.8% to $3.087 a pound.
  • Freeport-McMoRan Copper & Gold Inc.'s profit increased 2.5% from year-earlier levels.
  • China imported 211,957 metric tons of refined copper in June.
  • London Metal Exchange warehouse inventories fell 1,975 metric tons.
  • The world refined copper market was in a 60,000-metric-ton deficit in April.
  • China's copper imports declined 44% in June and 24% in the month.

Sources:

  • "BASE METALS: Comex Copper Futures Rise On Demand Outlook" published by Dow Jones Commodities News on July 21, 2010.
  • Comtex SmarTrend Alert by Comtex News Network, Inc. on July 17, 2010.
  • World Bureau of Metal Statistics.
  • International Copper Study Group.