Copper gains strength

Prices rise as dollar turns weak
Base metal prices ended higher on Friday, 22 January 2010. Prices rose in tandem with the slipping dollar, which increased the appeal of base metals as an alternate investment.
At USA, copper futures for March delivery ended higher by 5.2 cents (1.6%) to 3.347 a pound. For the week, copper ended lower by 0.6%. This year, till date, copper is lower by 3.4%. Copper ended FY 2009 higher by 140%.
At LME, copper for delivery in three months ended higher by $115 (1.6%) at $7,390. On 3 July, 2008, prices had touched an all time intra day high of $8,940.
Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. The metal was also pushed higher by record first-half imports to China, the world's largest user.
The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%.
In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies stayed steady against most of its counterparts. The dollar strengthened on fears that China will curb bank lending. The China Banking Regulatory Commission said it hasn't "specifically" told banks to suspend lending in January, but a report said that it had asked several banks to stop issuing loans. The dollar index dropped by a mere 0.2%.
In FY 2008, copper prices dropped by 54%. Prior to 2008, copper prices ended FY 2007 with a gain of mere 5.5% after a whopping 44% gain in FY 2006. The price of copper gained every year since 2002 as global economic growth boosted demand for the metal used in pipes and wires.
Among other metals traded in the LME on Friday, lead ended 2% lower at $2,247 a ton and zinc dropped 5% to end at $2,343 a ton. Nickel dropped 2% to end at $18,510. Aluminium shed 1.6% to end at $2,220 a ton.