Futures Market News
Copper futures slip yet are projected to rebound
Mar 27, 2012 02:48 PM
The industrial metal lost value as a result of signs indicating the U.S. economy is growing stronger, which strengthened the value of the U.S. dollar. Consequently, commodities such as the reddish metal lost value as the likelihood of the U.S. Federal Reserve employing a third round of quantitative easing slimmed down.
"Dollar strength is weighing on the market," broker Harry Denny with PVM Futures in New Jersey told Bloomberg. "Until the Fed sees that housing has fully recovered, they'll hint at stimulus. But I think they'll just leave that on the table."
At 1:51 p.m. on Tuesday, copper futures fell 0.22 percent, a 0.0085 cent loss to $3.879 per pound.
Tuesday's drop marks the first poor performance in three trading sessions for the industrial metal, which is sensitive to worldwide economic and financial news and developments due to its uses in manufacturing, construction and other industries.
Monday's gains for copper were the largest in nearly five weeks of trading as the industrial metal was performing more strongly earlier this year. Bloomberg links the gains to U.S. Federal Reserve chairman Benjamin Bernanke stating at a Monday morning speaking engagement that reducing the U.S.' unemployment rate is possible with additional monetary easing.
Bernanke did not rule out a third round of quantitative easing.
But, as of late, the industrial metal has slipped since China - the globe's top consumer of the reddish metal - has disclosed economic and financial information that indicates the host of the globe's most rapidly developing economic system is encountering some troubles during the recovery from the Great Recession.
Reuters reports copper futures' gains on Monday were as high as 2 percent. The publicatioin also noted Tuesday's losses are attributable to weak demand from China for the industrial metal, which dwarfed the likelihood of the U.S. Federal Reserve soon executing a third round of quantitative easing.
In February, copper futures climbed to $8,765 per metric ton, the highest price in five months. But China's troubles during the past several weeks have worked against the industrial metal's gains.
"I don't expect copper to break out of the $8,200-8,765 range," analyst Andrey Kryuchenkov with VTB told Reuters. "Before you see a pick up you need to see premiums rising in China, you need Chinese players to offloads the extra inventories and you need a pick up in consumption. Yes, February copper imports were better than people expected but that is all stockpiling from Chinese players hoping for a pickup in consumption rather than end-users demand."
February imports of the reddish metal by the Asian nation amounted to 484,569 metric tons, an increase of 17.1 percent as compared to figures from the month prior when 413,964 metric tons were imported, according to information released by the nation's General Administration of Customs.
Indicative of troubles in China is its industrial firms enduring profit losses during January and February, spread among petrochemicals, metals and automobile companies, according to Reuters.
But despite losses on Tuesday, the remainder of this year will see an increase in global demand of 3.1 percent for the reddish metal, a top official with a mining firm told Dow Jones Newswires.
Steve De Kruijff, chief operating officer of Xstrata Copper, said at the Asia Mining Congress 2012 summit that Chinese demand is set to increase 6.8 percent as the nation resumes industrializing.
Industrialization in the Asian nation "will continue to drive higher rates of copper consumption," the administrator of the North Queensland outfit said. "Inventory has been built up in anticipation of strong demand ahead."
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