Copper futures trim weekly decline on China trade data, Fed stimulus outlook

Copper reversed six days of declines on Friday after upbeat trade data from China signaled the governments economic expansion target was achievable, boosting demand prospects in the worlds top consumer. Expectations that todays U.S. employment data may curb speculations for an earlier-than-expected deceleration of Feds quantitative easing program also supported the market.

On the Comex division of the New York Mercantile Exchange, copper futures for settlement in December traded at $3.254 per pound at 9:45 GMT, up 0.16% on the day. Prices held in range between days high of $3.263 per pound and session low of $3.233, near Wednesdays one-month low of $3.224. The industrial metal lost nearly 0.2% on Thursday, a sixth consecutive daily retreat, but trimmed its weekly decline to less than 1.4% following Fridays rebound.

The red metal drew support after data by China’s General Administration of Customs showed the Asian nation’s exports rebounded above expectations in October after declining in September, helping sustain a targeted economic expansion. Stronger global demand sent overseas shipments soaring by 5.6% last month, exceeding analysts’ projections for a surge of 3.2% from the previous month’s 0.3% decline.

Meanwhile, China’s inbound shipments rose at a slower-than-expected pace but still marked a healthy expansion. The Asian country’s imports rose by 7.6% in October, underperforming expectations for an advance of 8.5% but still marked an improvement from September’s 7.4% gain. The upbeat exports reading widened the nation’s trade balance surplus to $31.10 billion, compared to projections for a rebound to $23.90 billion from the preceding period’s plunge to $15.20 billion.

Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, said in a note, cited by Bloomberg: “China’s export numbers suggest some – although not yet decisive — improvement in global demand momentum. Import figures reflect healthy expansion of demand.”

Market sentiment received a boost recently after China’s Vice Premier Zhang Gaoli said earlier in the week that economic conditions are stable and that the country can meet its main economic targets this year. China’s Communist Party leaders are scheduled to discuss policies in a four-day meeting starting November 9.

According to a Bloomberg News survey of analysts, copper traders were most bullish in eight months on expectations for stronger demand from China. Eighteen out of 32 analysts polled expected prices to advance next week, while seven were bearish and the remaining seven expected no significant change. This was the largest proportion of bulls since March 8.

Gayle Berry, an analyst at Barclays Plc in London, said for Bloomberg: “The strength in Chinese apparent demand has taken everyone by surprise. Chinese imports could stay quite strong.”

Investors will be eyeing upcoming data from China on Saturday to further gauge demand prospects in the world’s second biggest consumer. China’s National Bureau of Statistics is scheduled to report that year-on-year, the nation’s consumer inflation might have accelerated to 3.3% after jumping by 3.1% in the previous month, while on monthly basis, the Consumer Price Index likely rose by 0.2%, below September’s 0.8 advance. Meanwhile, producer inflation is projected to have slowed at a faster pace with the country’s Producer Price Index declining by 1.4%, down from 1.3% a month earlier.

The government agency is also expected to report China’s industrial production expanded by 10.0% in October, down from 10.2% in September but retail sales growth probably inched up by 0.1% to 13.4%.

The industrial metal was pressured yesterday after data by the Commerce Department showed U.S. GDP growth surged 2.8% in the three months trough September, the most in a year, defying analysts’ projections for a drop to 2% from the preceding quarter’s 2.5% expansion. Despite boosting demand prospects, the upbeat numbers suggested the U.S. economic recovery was sustainable and added to recently arisen speculations the Federal Reserve might pare its monthly bond purchases earlier than projected.

The metal however drew support on speculations that Fridays employment data will show that U.S. employers added fewer jobs in October, delaying the case for an earlier tapering. U.S. non-farm payrolls are expected to have risen by 125 000 in October, down from 148 000 in September, while the unemployment rate is projected to have inched up to 7.3% from 7.2% a month earlier.