Healthy Demand Expectations Boost Copper
Source: Reuters (8/9/10)
"Prices boosted by China demand, a weaker USD and sliding inventories."
Benchmark copper on the LME was trading at $7,454/ton at 1415 GMT from $7,370 at the close on Friday. The metal used extensively in power and copper earlier hit a high of $7,489/ton.
Market focus was on comments from a leading Chinese government economist, who said China's economy will enjoy a strong, stable second half, putting it on course for full-year growth of about 10%–11%.
"Demand looks healthy, especially out of China, the dollar is weaker and stocks are falling," said Edward Meir, analyst at MF Global, adding that most of the rally in base metal prices had probably already been seen.
"It may be hard maintaining levels above $7,500."
China is the world's largest copper consumer accounting for more than 30% of the global market estimated at around 19M tons this year.
The market is waiting for a raft of data from China this week, including July imports and exports.
However, traders said there were doubts about the strength of demand for industrial metals in the United States, after a weak monthly jobs report suggested growth could be faltering.
That is one reason why the dollar was weaker, making metals cheaper for holders of other currencies.
Investors are also looking ahead to Tuesday's Federal Reserve meeting.
"The Fed could leave policy unchanged, with just minor changes to the statement to acknowledge the fact that the economy has struggled recently," said Standard Bank in a note.
"A second option is to make minor tweaks to policy. . ."Alternatively, the Fed could be bold by, for instance, re-engaging quantitative easing with some new target set for bond purchases."