Copper futures for December delivery rose 0.4 percent to settle at $3.237 a pound at 1:18 p.m. on the Comex in New York, after touching $3.246, the highest for a most-active contract since Aug. 11.
Copper rose to a two-week high in New York amid signs of a strengthening economic recovery in the U.S., the world’s second-biggest consumer of industrial metals and hopes for a potential stimulus package from China.
Prices rose 3.3% last week, after a major commodities trading house surprised markets with an upbeat forecast for copper demand in the second half of this year, while data from the U.S. show an economic rebound is gaining traction. Some investors also believe China, the world’s largest consumer of the metal, may be preparing to launch a second round of economic stimulus, which could further boost copper demand. Copper’s rally has nearly reversed a sharp drop recorded earlier this month, although prices are still down about 7% for the year.
Prices are up more than three per cent in the last three trading sessions after a sharp decline earlier in the month. While the rally was sparked by an optimistic second-half outlook for the copper market from commodity mining and trading company Glencore this past Wednesday, it has continued in the face of weaker-than-expected August manufacturing numbers from China, which accounts of 40 per cent of global copper demand.
Recent data showed expansion in Chinese manufacturing fell to its slowest pace in three months while housing prices continued to drop. Beijing is likely to step up its policy efforts to ensure the economy hits its growth target of 7.5 per cent for the year, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.
“You have the increased spectre of Chinese stimulus money that’s keeping copper supported,” he said.
The focus this week will be on a flurry of key U.S. economic indicators, as investors look for further clues on the strength of the recovery and the possible future path of monetary policy. On Thursday, the U.S. will produce data on second quarter gross domestic product. The country will also release reports on new home sales, durable goods orders and initial jobless claims throughout the week.