Copper Rallies on China Demand Prospects
Source: Reuters, Maytaal Angel (9/13/10)
"China boosts hopes for demand, eases concerns over lackluster growth."
Benchmark copper for three-months delivery on the London Metal Exchange was last bid at $7,630 a ton in official midday rings from a close of $7,486 on Friday. Earlier, the metal used in power and construction jumped over 2 percent to $7,656.50.
Industrial production in China ramped up and money growth exceeded expectations in August, showing buoyant economic growth despite government efforts to clamp down on bank lending and property speculation.
Inflation, though at a 22-month peak, is unlikely to trigger an immediate interest rate hike, analysts said, as higher food costs were expected to be transitory after a spell of bad weather hit the country in the summer.
Copper suffered its first weekly decline in four weeks on Friday as risk appetite waned amid fears the China data could prompt tightening measures. These fears are now past, while demand prospects look better, even in the U.S.
Data on Friday showed U.S. wholesale inventories surged the most in two years in July, adding to signs that economic growth in the third quarter of the year may prove a bit stronger than many forecasters had expected.
Global copper supplies continue to fall, meanwhile.
"The draws in copper stockpiles look set to continue, there is a structural deficit and anything bullish will favor copper. Obama is trying to inject confidence and if he succeeds, together with Eastern demand, we'll see a spike past the recent high," said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.