Copper futures were marching higher on Tuesday amid increased wheeling and dealing on commodity markets for the industrial metal, according to The Wall Street Journal.
The surge began early during the day's trading session and was prompted by investors' purchase of long positions for the reddish metal. The base metal is sensitive to worldwide economic and financial developments due to its myriad uses in construction, manufacturing and additional industry.
"I think it's a general short-covering rally and a lack of new selling from the funds," principal Bill O'Neill with Logic Advisors told the news source on Tuesday. "The level of short positions was huge."
At 12:02 p.m. on Tuesday, copper futures rose 1.11 percent, a 0.036-cent lift to $3.555 per pound.
Tuesday's upward surge for the reddish metal arrives amid curious circumstances that were not entirely anticipated by market participants, like investors, traders and analysts, among other individuals.
The statistics office of China, the globe's largest consumer of the base metal – accounting for an estimated 40 percent of the globe's supply, recently released underwhelming economic information.
The Asian nation also is host to the globe's second-largest economy. The country has been toiling to bounce back from a rough 2012 and returns thus far this year have been mediocre at best and spotty at worst.
Its own production of copper last month increased 10.8 percent as compared to the same period last year. China generated 483,000 metric tons of copper in February.
The reddish metal has been pinched as of late as projections for supply this year are poised to push past demand. Three nations that generate the metal – Chile, Mongolia and Peru – are poised to boost mine production of the base metal this year.
Reuters reports Chinese production of copper in February was underwhelming. For that reason, industry eyes are training on this month's numbers.
Downward slope for second straight month
For the second consecutive month, Chinese output fell. That data comes after December 2012 production pushed to record-high levels.
The slowdown last month is linked to the reduced pace of smelter operations for the Lunar New Year, during which the Chinese market was closed.
The 483,000 tons generated last month come after the production of 492,000 tons during the month prior. But December production amounted to 580,000 tons.
"Smelters may have adjusted operation rates to cope with weaker demand and higher stocks in the domestic market," analyst Yang Xiaoguang with Jinrui Futures told the news source on Tuesday. "The output in March should rise from the previous month but high stocks may continue to restrict smelters' production."
He forecast this month's production to hover around 500,000 metric tons.
The strong performance of the reddish metal also proved to be beneficial to the market performance of the monetary unit of a nation that is a top worldwide supplier of the metal, Bloomberg reports.
The Chilean peso pushed to its 21-day peak on Tuesday, propelled higher by the upward drive of the base metal. Copper accounts for the majority of exports from the South American nation.
The peso drove to its highest level against the U.S. dollar since the middle of last month.
"Copper's pretty high," spot currency trading head Ronald Volpi with EuroAmerica Corredores de Bolsa SA in Santiago told the news source on Tuesday. "These are levels to buy the dollar. It's a good place to get back in."
An additional factor prompting the upward drive of the industrial metal was the strong performance of passenger vehicle sales in China. The Asian nation is the top buyer of copper generated by Chile.
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