Copper advances on easing Syria concern

Copper advanced on Wednesday as receding fears that the U.S. will launch a punitive military attack against Syria stoked demand for riskier assets and reduced concern that a war in the Middle East would hurt the global economic recovery.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December rose by 0.54% to $3.280 per pound at 9:05 GMT. Prices held in range between days high and low of $3.283 and $3.265 per pound respectively. The industrial metal slipped 0.2% on Tuesday but extended its weekly advance to over 0.5% following Wednesdays rebound.

Copper rose on Wednesday amid signs that the military conflict in Syria might be avoided in a diplomatic and peaceful way after the Middle Eastern country agreed to relinquish control of its chemical weapons. On Tuesday, Foreign Minister Walid al-Muallem said during a trip to Moscow that Syria accepted Russia’s proposal for granting international control to its chemical weapons as a way for peacefully resolving the conflict with the U.S. and averting military intervention.

“Yesterday we had a round of very fruitful negotiations with Foreign Minister Sergei Lavrov and he proposed an initiative concerning chemical weapons,” al-Muallem said. “And already by the evening we agreed to the Russian initiative.”

Later in the evening, President Barack Obama asked Congress in a televised address to the nation to delay voting for authorization of military action against Syria in order, seeking a diplomatic resolution to the problem after the Middle Eastern country agreed to put its chemical weapons under international control.

Meanwhile, the industrial metal continued to draw support on increased demand prospects in its top consumer China following a batch of upbeat economic data in the last days. The Asian countrys industrial production surged by 10.4% in August, exceeding analysts’ projection for a 9.9% rise and the preceding month’s 9.7% expansion. Meanwhile, the Chinese National Bureau of Statistics reported that Chinese Retail Sales surpassed both economists’ expectations and the previous month’s increase of 13.2% and increased by 13.4%.

Data showed the country’s total exports rose by 7.2% last month, exceeding analysts’ expectations for a 5.5% surge. Imports increased by 7%, below projections, but still above July’s 5.1% rise. China’s trade surplus widened to $28.6 billion from $17.8 billion in July, surpassing expectations for a rise to $20.0 billion.

Meanwhile, the Chinese National Bureau of Statistics reported that consumer inflation rose by 2.6% and remained below the government’s target, leaving extra room for mini financial stimulus, which could provide ground for sustainable growth. China’s producer-price index fell by 1.6% in August after dropping 2.3% in July, marking the smallest decline in six months.

Gains however remained limited amid broad expectations that the Federal Reserve will begin scaling back its monetary easing program after the upcoming Federal Open Market Committees meeting. According to a Bloomberg survey of 34 analysts conducted last Friday, the Fed is expected to announce the reduction of its $85 billion per month bond purchasing program by $10 billion at the Federal Open Market Committee’s meeting, due on September 17-18.

Li Ye, an analyst with Shenyin & Wanguo Futures Co., said for Bloomberg: “Everyone in the market now should feel a bit relieved about the Middle East tension. People will switch their focus to a possible U.S. tapering and China’s economic recovery.”