Copper Futures Catch a Bid

Updated from 2:59 p.m. EDT

Copper prices popped up almost 6% Thursday, mostly thanks to news that China's economy has grown faster than forecast so far this year, but boosted also by declining metal inventories.

Prices for May-dated contracts surged 16 cents to $2.99 a pound on the Comex division of the New York Mercantile Exchange. The PowerShares DB Base Metals(DBB Quote) exchange-traded fund, which tracks other industrial metals prices as well as copper, rallied more than 3%.

Industrial production in China grew almost 20% in the first two months of the year, according to new government data, besting consensus estimates and helping accelerate the rally in copper which has risen from under $2.40 a pound in early February.

"Judging by the way metal imports have picked up, which was dramatically, it looks like China's destocking is over," says William Adams, an analyst at BaseMetals.com in London, who notes that apparent consumption had looked negative as the country's metal users drew down inventories late last year rather than purchase on the international market at high prices.

Adams also says falling levels of inventory in London Metal Exchange warehouses are helping to bolster prices.

Turning to the technical side of things, chart watchers see the way clear for the rally to continue.

"The key move was above the 100-day moving [average] at $2.88," says Joe Palmisano, senior technical analyst at IDEAglobal in New York, which he says points to a target price of between $3.07 and $3.15 a pound.