BASE METALS: Comex Copper Rises To 5-Week High On EU Optimism
26 Oktober 2011 - 10:49PM
Dow Jones News
Copper futures rose to their highest levels in five weeks on
Wednesday as optimism that euro-zone officials would stave off a
credit crunch drew investors back to the downtrodden market.
The most actively traded copper contract, for December delivery,
rose 6.95 cents, or 2%, to settle at $3.49 a pound on the Comex
division of the New York Mercantile Exchange, the highest
settlement price since Sept. 21.
European Union leaders met Wednesday in a high-profile effort to
outline a plan to deploy the currency union's bailout fund, provide
a backstop for debt-laden Greece and shore up the region's
financial system.
Metals markets, and copper in particular, were some of the
hardest-hit assets as fears mounted in recent months that Europe
might be sliding toward a credit crunch. Investors worried that, if
bank lending dried up, consumers might not be able to finance
purchases of industrial metals.
The view that European officials were well on their way toward
reassuring the battered financial system eased the pressure on
industrial metals Wednesday.
Copper had jumped by more than 4% earlier Wednesday after German
lawmakers approved an expanded mandate for the euro zone's bailout
fund. The news wasn't unexpected, but it raised hopes that the
summit of EU leaders later in the day would go well.
"After the German vote came around, that was a sign that the
tone would be positive," said Bob Haberkorn, a senior market
strategist with MF Global. "The euro scenario is starting to come
to a head here."
If the summit goes as planned, "it's very bullish for metals,"
Haberkorn added.
The euro surged to a six-week high against the U.S. dollar after
the news, easing the pressure on dollar-denominated copper futures.
A weaker dollar makes futures cheaper for buyers using other
currencies.
Copper prices later pared their gains along with the falling
euro as investors began to hedge their bets that a quick fix to
what ails the currency union was imminent.
"Although supply-side developments are very supportive for
copper prices, investors are more concerned with demand prospects
at this stage," MF Global analyst Edward Meir said in a note.
Supply developments were again supportive Wednesday, as
Freeport-McMoRan Copper & Gold Inc. (FCX) invoked force
majeure, a contract provision allowing it to suspend shipments from
its Grasberg mine in Indonesia. An ongoing labor strike there has
"impacted our ability to fully perform our sales commitments," said
Ramdani Sirait, a spokesman for Freeport's Indonesian
subsidiary.
Copper prices were supported for much of the last year by the
view that copper supply would fall short of rising global
demand.
Copper settlements (ranges include electronic and pit trading):
Oct $3.4880; up 6.90 cents; Range $3.4875-$3.5725
Dec $3.4900; up 6.95 cents; Range $3.3960-$3.5880
-By Matt Day, Dow Jones Newswires; 212-416-4986;
matt.day@dowjones.com
--Deden Sudrajat contributed to this article.
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