Copper futures gained today, as speculation of easier investment climate in top-consumer China raised positive outlooks for the economy. Tomorrow the government report for industrial production in April will be released, a major force on copper markets.
On the COMEX division of the New York Mercantile Exchange, copper futures for settlement in July added 2.03% to trade at $3.1455 per pound at 12:22 GMT today. Prices shifted in a daily range between $3.0840 and $3.1545 a pound, reaching the highest price in two months.
Information that China will be easing investment limits for listed companies in the foreseeable future boosted confidence in the economy, prompting a surge in stocks, which was followed by copper. China consumes about 40% of the world supply of the industrial metal.
“The Chinese announcement is good for the market in the medium and long term and raises the government’s attention to the stock market to the state level,” said for Bloomberg Wu Kan, a fund manager at Shanghai-based Dragon Life Insurance Co., which oversees about $3.3 billion.
Early on Tuesday, a report on industrial production for April in China is projected to show the sector has grown by 8.7-8.9% on an annual basis, in line with the figure from last year of 8.8%. The figure stokes confidence in the market, after the quarterly growth for Q1 of 2014 was reported to be the worst for the last 18 months.
Previously, Chinese foreign trade had improved significantly in April, a report on Thursday revealed. Both exports and imports beat expectations of contraction to mark slight gains at 0.9% and 0.8%, respectively. Trade balance had also improved on forecasts to settle at a $18.45 billion surplus, more than double that of March. Copper imports increased by 7.2% on a monthly basis to reach 450 000 tons.
Demand is picking up pace in China, which consumes more than 40% of the world supply of copper. Further still, construction is entering active season, and the sector accounts for 60% of the country’s copper consumption. The government has been buying massive amounts of the red metal, probably as much as 500 000 tons, fueling infrastructure and housing projects.
Elsewhere, reports on industrial production in the EU will be released later this week. Also, gauges for business conditions for New York and Philadelphia are due. Later in the week, important data on the US housing sector, which consumes the lions share of copper in the States, will be released, with expectations of significant growth.
Technical view
According to Binary Tribune’s daily analysis, in case Copper July futures manage to breach the first resistance level at $3.0972 per pound on Monday, they will probably continue up to test $3.1113. In case the second key resistance is broken, the industrial metal will likely attempt to advance to $3.1337.
If the contract manages to breach the first key support at $3.0607, it may continue to slide and test $3.0383. With this second key support broken, the movement to the downside will probably continue to $3.0242.
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