Investors were proceeding with caution as the U.S. dollar advanced in value. Policy makers with the U.S. Federal Reserve are slated to convene two days of meetings next Tuesday and Wednesday, when they might slash economy-spurring monetary stimulus measures. The reddish metal is sensitive to worldwide and domestic financial and economic developments due to its myriad uses in construction, manufacturing and additional industry.
The Federal Open Market Committee, as the body of policy makers is known, has expressed an interest in reducing the economy-spurring measure. The Fed has been monitoring economic data released by the U.S. as a method of gauging the strength of the U.S. economy in the wake of the Great Recession.
One strategist pointed to Producer Price Index set for release on Friday and a Consumer Price Index to be distributed early next week as being pivotal for the FOMC.
"It is all about the taper and its timing, of course," strategist Anita Paluch with Varengold Bank told Reuters on Friday. "The only high profile data out there today is U.S PPI data, (which is) expected to pick up. And since it is highly correlated with the CPI numbers … due out next week on Tuesday, it may fuel speculation of quantitative easing being wound down."
At 10:02 a.m. on Friday, copper futures edged up 0.26 percent, a 0.0085-cent lift to $3.304 per pound.
Chinese activity benefits reddish metal
Copper prices also are sensitive to activity in China, which consumes an estimated 40 percent of the world's supply. The Asian nation is ahead of the U.S. as the world's top consumer of the reddish metal.
Consumers of the base metal in China are preparing to pay increased premiums to acquire the commodity. Merged with global exchange stocks dropping to their lowest levels in five years, investors and analysts are keeping close eyes on tight supplies that might reach into next year.
"We're definitely looking at this quarter and the first quarter of next year to be tighter than what the annual surplus would suggest," analyst Sijin Cheng with Barclays in Singapore told Reuters. "All of the price indicators are pointing to a tight balance, and also our contacts are saying it's still tough to get copper."
The Wall Street Journal reports hopes are high about increased use in China. Some observers believe the reason why inventories have been dropping is because of increased consumption by China.
One close observer said market sentiment indicates inventories will bounce back as soon as next month.
"Everybody thinks in the first quarter there will be larger shipments," vice president George Gero with RBC Capital Market told The Wall Street Journal on Friday.
Generation surges in Asian nation
Production of the industrial metal in China climbed to a record high last month, Bloomberg reports. That came to light as scrutiny focused on Fed policy makers preparing for next week's meetings.
Thus far this week, copper futures are up about 1.2 percent. The reddish metal has seen better years as it is down more than 9 percent with two-plus weeks left in the year.
The strong production of the reddish metal in China is linked with increased treatment and fees for refining prompting some smelters to move forward with efforts to process more material that is used as part of copper's generating process.
"High production adds weight on the market and we may see a waning premium, even a discount, over spot copper prices next year," analyst Xiong Dabiao with Minmetals Futures Co. in Shanghai told Bloomberg on Thursday.
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