Page 1 of 2 It's been a while since we last checked in with copper—and given the jump it made on Monday, now seems like a good time to check back. Copper trades primarily in two places - the London Metal Exchange alone."and COMEX. LME copper is priced in dollars per metric ton and COMEX trades in dollars per pound. Any way you slice it, copper prices have taken a beating in the past year; still, there is now a glimmer of hope. On The Plus Side Prices rose 4.6% on Monday to $4,135 in London. (Copper during the COMEX session showed a more modest 2.5 percent increase, closing at $1.832 per pound.) The price jump came after China reported February copper imports that were twice January's level. (An earlier report stated imports rose 41.5 percent—this was upgraded to 50% on Monday.) In real numbers, that comes to a whopping 270,948 metric tons of copper, or (carry the two ...) well over $1 billion at Monday's prices. That's a big number, even by TARP standards. So it's understandable that this could move the market.
Much of that was believed to have been bought by China's State Reserves Bureau (SRB). Forbes reported: "Continuous drawdowns in copper inventories and buying by the State Reserves Bureau (SRB) of China, the world's top copper consumer, boosted prices more than 20 percent in March alone." What China's going to do with that copper is a bit of an issue. China does have an $85 billion plan to fixing its electrical infrastructure, a plan which is sure to require lots of copper wiring, but there's plenty of concern that the current imports are just stockpiling. But there's other good news. There may be some support for copper prices from the U.S. housing sector—think copper pipes and wires. Hard to imagine in this market, but in the latest statistics on construction (released March 18), the new housing starts in February rose 22% from January. Additionally, yesterday analysts were surprised when new home sales rose 4.7 percent for February when they were expecting a decline. The increase is the largest gain in the past 10 months. To be honest, I won't be surprised if these numbers are wrong, but until someone says otherwise, it's a surprising increase, and surprises make for price pops. That news, plus increases of 11 percent in capital goods, has combined to shed a weak light of hope that the economy may be beginning to turn itself around. From the Globe and Mail: "The numbers are getting better," said Tom Hartman, broker with Altavest Worldwide Trading in Mission Viejo, Calif. "It does not necessarily mean that we are in the recovery already, but perhaps we are seeing some type of bottom trying to be laid out in the market."
|
Loading data ...