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NEW YORK (TheStreet) -- Copper prices were popping on optimism about the U.S. housing sector, China's economic development plans and a bullish Goldman Sachs report.

The drivers diluted the impact of a weekly commitment of traders report showing that speculators and investors reduced their net long positions in copper in the week of May 17.

July copper futures were popping 2.4% to $4.111 a pound, extending the previous day's gains,

"Support is coming from the surprisingly positive trend in new home sales in the USA, stirring hope of a recovery of copper demand in the second largest consumer country," a Commerzbank Commodity Research report said.

"Trends in China, by far the world's biggest consumer, will play an even greater role."

Sales of new homes in the U.S. in April accelerated by 7.3% to a higher-than-expected annualized rate of 323,000, from the revised March rate of 301,000, the U.S. Census Bureau and the Department of Housing and Urban Development said Tuesday.

Commerzbank Commodity Research says the latest inventory trends suggest a revival of the fairly sluggish apparent demand shown in the International Copper Study Group's (ICSG) January-February official figures. Commerzbank notes that there's a possibility the apparent demand calculated by the ICSG could be distorted downwards, factoring in hidden stocks.

"The LME prices, which are trading well below the Shanghai prices after the correction, indicate in any case that Chinese businesses may cover their requirements to a greater extent on international markets, and China's requirements should remain high given the multitude of new residential and infrastructure projects stipulated in the five-year

economic development plan 2011-2015," Commerzbank analyst said in a report.

Copper stocks in Shanghai shrunk by 60,000 tons in March to April and the strong inventory build observed up until the end of April in Asian London Metal Exchange warehouses appears to have ended, Commerzbank says.

ANZ Research Commodity Analyst Natalie Robertson says reports suggesting that China is planning to expand output of its nonferrous secondary scrap market by 60% from 2010 to 1.2 million tons by 2015 implies an expected improvement in underlying demand.

Goldman Sachs

now says that copper prices represent a good buying opportunity after saying last month that it was closing out of its commodities basket trade, citing near-term risk-reward considerations.

Despite the bullish reports on copper in recent days, data from Crédit Agricole Corporate and Investment Bank and the Commodity Futures Trading Commission indicates that in the week of May 17, speculator and investor net long positions in copper fell by 66 kilotons to 39.6 kilotons, the lowest since mid-2010 thanks to worries about global growth, Eurozone sovereign debt and a stronger dollar.

Copper stocks were rising in midday trading.

Freeport-McMoRan Copper & Gold


was gaining 2.6% to $50.07, while peer

Southern Copper


was rising 1.7% to $35.34. Copper miner

Taseko Mines


was up 1.2% to $5. Copper fabricator

Encore Wire


was trading sideways at $22.75.

Mining equipment maker

Bucyrus International

( BUCY) was unchanged at $91.68, while peer

Joy Global

( JOYG) was up 1.2% to $87. Mining equipment manufacturer



was adding 1.8% at $103.37.

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-- Written by Andrea Tse in New York.

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