Copper Nears Two-Week High on China-Demand Hopes

By Ira Iosebashvili 

Copper prices rose to their highest level in almost two weeks Friday, with some market participants attributing the industrial metal's strength to expectations of more economic stimulus from China, its largest consumer.

Copper for September delivery, the most actively traded contract, recently was up 2.4 cents, or 0.8%, to $3.200 a pound on the Comex division of the New York Mercantile Exchange, its highest level since Aug. 11.

Prices are up almost 4% in the last three trading sessions after a sharp decline earlier in the month. While the rally was sparked by an optimistic second-half outlook for the copper market from commodity mining and trading company Glencore on Wednesday, it has continued in the face of weaker-than-expected August manufacturing numbers from China, which accounts of 40% of global copper demand.

Some analysts said the metal's recent strength may stem from expectations that China is prepared to embark on a second round of economic stimulus, as it struggles to honor its pledge of delivering 7.5% economic growth this year. China launched a so-called mini-stimulus in April, which has been credited for producing a mild economic turnaround after a slow start to the year, but recent data suggest a slowdown in some key sectors of the economy.

"The copper market seems to be looking past the poor Chinese numbers towards expectations of more economic stimulus," said Eugen Weinberg, an analyst at Commerzbank.

Copper also has received a boost from a spate of better-than-expected U.S. economic numbers. U.S. factory activity hit its highest pace of expansion since April 2010, while existing-home sales rose for a fourth-straight month, signs that the recovery here is gaining traction. The U.S. is the world's second-largest copper consumer.

Write to Ira Iosebashvili at [e-mail]

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