Copper advances ahead of U.S. data, Bernanke statement

Copper advanced on Tuesday ahead of U.S. economic data, which is expected to show an advance in industrial production, and Ben Bernankes testimony to Congress on Wednesday and Thursday.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.151 a pound at 8:52 GMT, up 0.22% on the day. Prices held in a tight range between days high and low of $3.162 and $3.133 a pound, remaining fairly unchanged during European trading. The industrial metal market a slight daily decline on Monday and has declined 0.1% so far this week.

Copper gained more than 2.7% last week after Fed Chairman Ben Bernanke backed as much as half of the FOMC policymakers in their opinion the central bank’s monetary easing program shouldn’t be tapered yet. He said the U.S. economy needs Fed’s accommodative monetary easing program over the near-term as while the manufacturing sector, housing industry and other sectors from the industry have improved, the latest 7.6% unchanged reading of the Unemployment Rate pointed at a fragile labor market. Meanwhile, inflation remained stable and low, giving the central bank more room to ease money supply.

Xiong Dabiao, an analyst at Minmetals Futures Co. in Shanghai, said for Bloomberg: “Copper is still seeking direction as market focus is on the timetable of the U.S.’s exit of stimulus policies. People are also watching U.S. economic data, hoping to find clues on what Bernanke plans to do.”

Yesterday, the industrial metal was pressured as data from China reinforced the bearish sentiment over the Asian countrys economic slowdown, despite the nine-month high of copper imports in June due to arbitrage. China’s economy growth met projections at 7.5% in the second quarter but was below last year’s 7.7% reading. On a quarterly basis, Chinese GDP rose by 1.7%, above Q1′s 1.6%, but below projections for a 1.8% expansion.

According to China’s National Bureau of Statistics, the Asian country’s industrial production in June failed to meet expectations for a 9.1% surge and stood at 8.9%, also below May’s 9.2% reading. Retail Sales rose by 13.3% on an annual basis, exceeding both projections and the comparable period’s reading of 12.9%.

The Asian country accounts for 40% of the metal’s global consumption. Signs of economic expansion or contraction have a strong influence on copper pricing as the red metal is widely used in China’s industrial production.

Investors are also looking ahead into this week’s key U.S. economic data, which will provide information about the economy’s recovery pace. Consumer inflation (CPI) and Industrial production are scheduled for release on Tuesday. CPI on annual basis is expected to have risen by 1.6%, up from the preceding period’s 1.4% gain. Industrial production should have accelerated by 0.3% in June after remaining unchanged during may. Manufacturing, which makes up 75 percent of the country’s total output, should have increased for a second month, thus supporting demand prospects for the industrial metal.

On Wednesday, Building Permits and Housing starts will provide data about the U.S. construction sector. The Labor Department will release Initial Jobless Claims on Thursday. The number of people who have filed for unemployment payments is expected to have dropped by 20 000 to 340 000 after last week an unexpected surge to 360 000 supported Bernanke’s statement that the U.S. labor market is still fragile.