Copper Scales a New Peak

Source:

". . .the red metal is poised to hit the next platform en route to recovery."

Copper prices hit a 19-month peak as increased risk appetite drove investors to the red metal. The biggest fear permeating the market in recent weeks has been of potential fallout from Greece's economic collapse. These fears were pacified this week when Greece followed up Monday's seven-year syndicated bond deal with an announcement that it will reopen the 5.9% October 2022 government bond at an auction, to raise up to US$1.35 billion.

Extra impetus for copper came by way of a weak greenback and collapsing inventories. Stockpiles of copper in warehouses monitored by the London Metal Exchange fell for a 19th straight time—the longest slump since July.

The markets are anticipating important U.S. data. On Friday, non-farm payroll jobs data will be issued. However, the markets will be closed; so effects of the data won't be felt until the following week.

So far in 2010, copper has climbed 5.6% and is on track for a fifth straight quarterly gain. Driving prices are increasing demand and inventories reduction as, overall, the global economic outlook trots down the path to recovery. Coupled with the lack of new copper projects coming online, the evidence is accumulating that the red metal is poised to hit the next platform en route to recovery.

Data out of Chile highlighted that the earthquake did little to affect copper output. In fact, February copper output rose 3.8% compared to last year, touching 394,742 tons. The National Statistics Institute said the quake resulted in only minor damage to some mines and had marginal impact over output after some deposits halted operations briefly due to power disruptions. Daily production in February was 14,097 tons. In January, the South American country produced 13,678 tons a day.

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