Copper Prices Surge on Stronger Euro and US Economic Data

Copper futures rose sharply on Tuesday, boosted by a weaker dollar and strong US economic data, including a surprise jump in housing starts. The stronger euro, which broke above the $1.31 level, also contributed to the rise in copper prices. The industrial metal, widely used in residential construction, has been benefiting from the improving US economy.

Key Takeaways:

• Copper futures for March delivery gained 6.10 cents, or 1.8%, to settle at $3.3695 a pound on the Comex division of the New York Mercantile Exchange.
• December-delivery copper rallied 6.20 cents, or 1.9%, to settle at $3.3630 a pound.
• US housing starts rose 9.3% in November to their highest level in 19 months, boosting copper prices.
• A stronger euro helped copper prices maintain their upward momentum, as copper futures are denominated in dollars and can appear less expensive to investors who use other currencies.
• Bart Melek, head of commodity strategy at TD Securities, warned that the longer-term outlook for copper is growing dark due to a likely slowdown in China's demand and a recession in Europe.
• Melek expects copper prices to slip below $3 a pound in early 2012.

Statistics:

• Copper futures for March delivery gained 1.8% to settle at $3.3695 a pound.
• December-delivery copper rallied 1.9% to settle at $3.3630 a pound.
• US housing starts increased 9.3% in November to their highest level in 19 months.
• The stronger euro broke above the $1.31 level for the first time in a week.
• Global consumption is expected to increase by less than 3.5% next year, compared to a 7.4% average in the last two years.

Sources:

• Dow Jones Commodities News via Comtex
• Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com