Copper rises on China data, U.S. industrial production

Copper rose on Tuesday as positive economic data from top consumer China boosted demand prospects for the metal. Upbeat U.S. industrial production reported on Monday continued to underpin the market. Gains remained limited amid broad expectations for Quantitative Easing tapering announcement at the FOMC meeting.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December rose by 0.11% to $3.226 per pound at 8:30 GMT. Prices ranged between days high and low of $3.231 and $3.198 per pound respectively. The industrial metal fell by 0.2% on Monday but erased its weekly decline and marked a 0.1% weekly advance following Tuesdays gains.

Copper traded lower throughout the Asian session but rebounded in early European trading as The Conference Board reported that its Leading Economic Index for China rose by 0.7% in August and stood at 269.3. This comes after a 1.4% advance in July and 0.8% increase in June. Five of the six components of the index contributed positively to the reading.

Andrew Polk, resident economist at The Conference Board China Center in Beijing commented on the slowdown: “LEI increased in August, but its growth has slowed as real estate activity slumped markedly. While recent improvements in China’s industry and retail sectors signal some stabilization in current conditions, the easing of the LEI’s six-month growth rate, coupled with downside risks from the real estate sector, suggest the pace of economic growth will remain muted in the coming months.”

The Conference Board Coincident Economic Index, which measures current economic activity, rose by 1.2% in August to 248.7 after gaining 1.1% both in July and in June. All five components added to the positive value of the index.

The industrial metal was also supported yesterday as data showed that U.S. industrial production in August has matched analysts projections for a 0.4% expansion, compared to remaining flat in July. The report also showed that capacity utilization, which measures of how fully firms are using their resources also met economists’ expectations and rose by 0.2% to 77.8%.

Manufacturing production, a component of the broader indicator, rose by 0.7% in August and reversed July’s 0.4% drop, mainly due to a 5.2% rebound in automobile assembly, which declined 4.5% in July.

Gains however remained limited as market players broadly expected the Federal Reserve to begin paring its monetary easing program after the upcoming two-day FOMC meeting, due on September 17-18. According to a Bloomberg survey conducted on September 6, the central bank will reduce its monthly purchases of Treasuries to $35 billion from $45 billion and keep mortgage-bond buying unchanged at $40 billion. Meanwhile, Credit Suisse analysts expected a $20 billion reduction.

Tetsu Emori, the chief fund manager at Astmax Asset Management Inc. in Tokyo, said for Bloomberg: “Investors were reluctant to take new positions ahead of the Fed meeting. Overall sentiment remained subdued.”