Commodities Trading and the Copper Futures Market
It’s interesting to see December high grade copper futures trading at $3.586 per pound. In a week that the copper price rose 2.85%, the industrial metal rallied to a 5 month high of $3.5905 following a slide in the US dollar.
The weakness in the US currency was instigated by the US Federal Reserve, which confirmed that it stood ready to inject another round of stimulus to reinvigorate growth in the American economy. The possibility of further Quantitative Easing consequently weighed on the dollar which therefore made metals appear intrinsically cheaper in foreign currency terms.
Tight global copper supplies and resilient demand for copper from emerging markets have also supported the metal’s price increase.
If you are day trading note that recent trade data showed that, thanks to a surge in imports, China’s annual consumption of refined copper rose by almost 25% in August 2010.
Elsewhere, a separate report by the International Copper Study Group showed that world consumption of refined copper surpassed production by 281,000 tonnes between January and June 2010. This compares with a deficit of 125,000 tonnes in the same period for 2009.
Not only that but according to Anthony Grech of IG Markets, “Copper output at the world’s largest mine is likely to remain tight. The chief executive of Codelco recently said that the mine’s copper output will remain unchanged at 1.8m tonnes in 2010 and throughout 2011.
“If you are financial spread trading on the commodities markets then be aware that copper has gained 8.65% over the last month. In the greater scheme of things it is probably not too unreasonable to expect a bit of a pullback”.
This entry was posted on Tuesday, September 28th, 2010 at 4:29 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.