Copper adds strength

Housing data in US helps red metal to stop losing streak
After quite a few consecutive days of dropping, base metal prices ended higher on Tuesday, 02 February 2010. Prices rose due to better than expected economic reports mainly in the housing sector and weak dollar.
At USA, copper futures for March delivery ended higher by 0.6 cents (0.2%) to $3.0895 a pound. This year, till date, copper is lower by 8%. Copper ended FY 2009 higher by 140%.
At LME, copper for delivery in three months ended higher by $25 (0.4%) at $6,815. 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%.
Among economic data expected for the day, The National Association of Realtors reported on Tuesday, 2 February 2010 that pending home sales in US rose in December 2009 after the federal tax credit was reinstated.
As per the report, the pending home sales index rose 1% in December after plunging 16.4% in November, with buyers reacting first to the expiration and then to the return of the tax credit. The index was up 10.9% compared with December 2008. In December, existing-home sales fell 16.7%.
Separately, the Commerce Department reported on Tuesday, 2 February 2010 that housing vacancies remained near record levels in the fourth quarter with 2.1 million vacant homes for sale and 4.5 million for rent. Of all housing units built since 2000, 21% were vacant.
In the currency market on Tuesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies fell by almost 0.3%.
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.
At the MCX, copper for February delivery closed lower by Rs 0.45 (0.14%) at Rs 315.6/Kg. Prices rose to a high of Rs 318.9/Kg and fell to a low of Rs 312.3/Kg during the day's trading.
Among other metals traded in the LME on Tuesday, lead ended 4.1% higher at $2,041 a ton and zinc gained 1.4% to end at $2,105 a ton. Nickel dropped 2.8% to end at $17,595. Aluminum added 0.5% to end at $2,090 a ton.