Copper Edges Up on Bright Demand Prospects
Source: Reuters (4/29/10)
"Inventory trends are turning positive"
Benchmark copper for three-months delivery on the London Metal Exchange (LME) traded at $7,425 in official midday rings from a close of $7,400 on Wednesday.
"Risk sentiment has taken a dent (but) fundamentals will help support; demand for all metals is improving globally, not just in China," said Gayle Berry, analyst at Barclays Capital. "Inventory trends are turning positive; outside of the Eurozone economies data is positive."
The euro rose versus the dollar on Thursday on hopes a bail-out plan for debt-stricken Greece would be finalized soon.
A weaker dollar makes dollar priced metals cheaper for non-U.S. investors.
On Wednesday, the euro fell to a one year low versus the dollar after Standard & Poor's cut credit ratings for Spain by one notch, a day after slashing credit ratings for Greece to junk status and downgrading Portugal.
The move weighed heavily on metals as fears of debt contagion in the Eurozone spread, but the complex later recovered after the U.S. Federal Reserve kept rates on hold and gave an upbeat assessment of the U.S. economy. "We remain loyal to our stronger for longer mantra, with the fundamental outlook over the next two years indicating a strong argument for higher prices in copper, zinc and lead," said RBC Capital Markets in a note.
"However over the next few months the market is likely to have to contend with apparent demand deterioration in China and oversupply in a number of the metals, which in the current risk-adverse climate could well lead to further price falls in the weeks ahead."