Copper futures jump 2 per cent
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NEW YORK, April 9, Dow Jones
April 10 2013, 07:37AM
Copper futures jumped more than two per cent on Tuesday as a flurry of upbeat news forced bearish traders to shed bets on lower prices.
US wholesale inventories fell 0.3 per cent in February, while sales rose 1.7 per cent, in a sign that businesses drew down their stocks to meet rising demand. The data bolstered the case for higher copper demand in the world's second-largest market for it.
Copper prices rallied as a result, with metal for May delivery rising 7.05 US cents, or 2.1 per cent, to settle at $US3.4415 a pound on the Comex division of the New York Mercantile Exchange.
The news was a turnaround for the bear-heavy market. Last week, fund managers who bet copper prices would fall outnumbered bullish traders by nearly 3 to 1, according to weekly data from the Commodity Futures Commission.
These bears are under pressure this week as concerns about excess supplies are easing. On Monday, unionised mine workers in Chile announced a nationwide 24-hour strike that started Tuesday.
Chile supplies about a third of the world's copper, and Tuesday's action comes on the heels of a port workers strike that lasted nearly three weeks, delaying copper shipments out of the country.
As a result, copper prices climbed to their highest settlement price since $US3.4435 a pound on March 27, and locked in their highest percentage gain since copper rallied 2.3 per cent on January 2.
"I don't think (Tuesday's rally) is new buying, I think this is short covering," said Adam Klopfenstein, senior market strategist with Archer Financial Services.
"People are getting blown out of the market" as prices advance, he said.
Investors who have bet on copper prices to fall lose money if prices rise instead, and must enter the market as buyers to close out losing bets. Such trades had been profitable for the first quarter of the year, with copper prices slumping 6.9 per cent through March 31.
Settlements (ranges include open-outcry and electronic trading): Apr copper $3.4380; up 7.00 cents; Range $3.3950-$3.4455 May copper $3.4415; up 7.05 cents; Range $3.3735-$3.4525