Copper rises to a two-month high on upbeat China data

Copper hit a two-month high on Thursday following unexpectedly upbeat trade data in China, which fueled optimism over stabilizing economic activity in the worlds top consumer of the red metal.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.251 a pound at 8:30 GMT, up 2.46% on the day. The industrial metal touched a days high at $3.257 in early European trade, the highest since June 10, while days low stood at $3.175 a pound. The contract has advanced in six days out of seven and settled 0.4% higher on Wednesday, extending current weeks advance to over 2.6% after closing the previous week 2.05% higher.

Copper was shot more than 2.4% on Thursday as the Chinese General Administration of Customs reported the country’s exports rose by 5.1% in July after contracting 3.1% in June. Expectations for a 3% climb were exceeded. Meanwhile, imports also surpassed analysts’ projections for a 2.1% jump and surged 10.9% last month following a 0.7% decline in June. The Chinese trade surplus narrowed to $17.82 billion from $27.10 billion a month earlier and confounded economists’ forecasts for an increase to $27.20 billion. The Asian nation is the worlds biggest copper consumer and accounts for more than 40% of global consumption. The Chinese government announced last month that it is ready to take measures to protect its 7.5% economic growth target for the year, which boosted sentiment for raw materials demand.

Chinas positive economic figures offset the recently arisen speculation that Fed might taper its monetary easing program in the upcoming months, possibly after FOMCs next meeting on September 17-18. Recently, several Fed presidents stated opinions that the U.S. labor market and economy as a whole are improving, thus fueling speculation the Federal Reserve might wind down the Quantitative Easing program.

Fang Junfeng, an analyst at Shanghai CIFCO Futures Co., said for Bloomberg: “Copper was supported by a positive demand outlook as China has pledged to stabilize growth and the U.S. economy recovering.”

Copper traders are looking ahead at tomorrows key China economic data, which give further information about the countrys economic activity. On Friday, China’s CPI is expected to have risen to 2.8% year-on-year and 0.1% on a monthly basis. The country’s Producer Price Index should have declined by 2.2%, compared to a 2.7% contraction a month earlier. According to analysts’ projections, Industrial Production should have risen by 9%, while Retail Sales are expected to have surged 13.5%, compared to 13.3% in the preceding period. If the positive anticipations are confirmed, a moderate-to-strong rise in raw materials should be expected.