Copper strengthens

Demand hopes take red metal prices higher

Copper prices rose higher at Comex on Monday, 28 December 2009. Prices rose as the dollar fell and on anticipation for higher demand for red metal in coming months. Better-than-expected economic data in Japan and word that stimulus policies in China will remain intact increased the demand hopes for the red metal.

At USA, copper futures for March delivery ended higher by 4.4 cents (1.3%) to 3.3365 a pound. Last week, copper ended higher by 2.3%. Copper ended November 2009 higher by 6.6%. On a year to date basis, copper has climbed 121.5%.

LME trading was closed due to a public holiday.

In the currency market on Monday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.4%.

Also driving copper prices higher were the fact that copper inventories tallied by the Shanghai Futures Exchange fell 7.7% to 96,362 metric tons last week. China, the world's biggest copper user, said its economy expanded by more than 8% this year. Prices also rose as labor disputes threatened to disrupt supplies from South America.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.

In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.