COPPER futures rose to two-week highs today as traders viewed recent declines in prices and falling global stockpiles as an excuse to buy.
The most actively traded contract, for July delivery, settled US6.9 cents, or 1.7 per cent, higher, at $US4.1215 a pound on the Comex division of the New York Mercantile Exchange, the highest ending price since May 4. The contract rose 3.5 per cent on the week.
Thinly traded May copper ended 1.8 per cent higher at $US4.1190 a pound.
Since touching six-month lows last week, the industrial metal has rebounded above the $US4 mark, supported by bargain buying and signs of steady physical demand from Asian buyers.
Copper stored at Shanghai Futures Exchange warehouses fell to its lowest levels since September 2010 this week, the ninth consecutive week of declines, the exchange said last night. Market participants attributed the declines to improving demand from copper fabricators.
"The sharp reduction of SHFE stocks suggests the Chinese market is increasingly tightening," analysts with Commerzbank said Friday in a research note.
Declines in imports earlier this year led some market participants to worry that efforts by the world's largest copper consumer to stifle inflation were curbing the country's appetite for metals.
SHFE-housed copper stocks fell 15,357 tonnes on the week, to 90,108 as of last night. Closely-watched stocks of bonded copper fell 3385 tonnes to 30,609 tonnes.
Meanwhile, inventories of copper stored in London Metal Exchange warehouses, which had shown steady builds in recent weeks, fell on Thursday. Stocks stood at 466,250 tonnes on Thursday, down by 775 tonnes from Wednesday.
"The market has had some momentum for the last week or so," said Michael Gross, commodity analyst with OptionSellers.com. "There's buying across commodities in general today, with gold leading the charge."
The gains came despite worse-than-expected readings this week on the US housing and manufacturing sectors. The industrial metal is sensitive to changes in the economic outlook because of its widespread use in construction and manufacturing.
Futures have also taken cues from moves in currency markets recently, but were given less direction this week as the US dollar moved indecisively. Like other US dollar-denominated commodities, copper can fall when the greenback rises and makes the futures more expensive for market participants using other currencies.
Copper's rise today came despite strength in the US dollar, a sign that traders were betting the steep pullback across commodity markets earlier this month had pushed prices too low, Gross said.
The ICE US Dollar Index, which measures the US dollar against a basket of currencies of major US trading partners, was at 75.485 at the close of Comex floor trading, up from 75.123 late in the previous New York session.
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