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Market questions copper price after 12% gains in January

February 01, 2012 - 10:36 GMT Location: London

KEYWORDS: Copper , copper prices , base metals , rally , LME , SHFE , Chinese imports , warehouse stocks

After the sharp rally in copper prices throughout January, producers are buying puts to capture what they view as the top of the market, while funds remain cautious of making fresh investments in copper, sources told Metal Bulletin.

The rise in copper prices has caught many analysts off-guard and encouraged physical buyers to run down stocks, sources said. A survey of traders, brokers, producers, consumers and analysts indicates that the market is overbought, but at the end of January copper clung to gains to settle at $8,495/95.5 in official trading on Tuesday January 31, up by 12.3% on the month and close to highs of $8,622/22.5 per tonne recorded on January 27. It is the sharpest monthly rally seen since December 2010, and one that took prices to a four-month high. Over the month, the euro rose by 1.33% against the dollar and the FTSE 100 rose by 2.45%. While a healthier appetite for risk in the wider markets has been supportive, the rally in copper was in the first instance driven by events in China. On January 8, yuan-denominated lending figures for December beat expectations, and on...

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