The price of copper rose to an 11-week high above $3.72 a lb in New York futures trade on Friday, with robust growth statistics from China, the world's leading consumer of the red metal, fuelling the momentum buying, analysts said.
At the COMEX division of the New York Mercantile Exchange, copper for September delivery peaked at $3.7250 a lb, its highest level since May 7, before settling at $3.7055, up 4.35 cents from the prior day. Red metal futures traders in New York took their early morning cue from stronger overseas markets.
Copper futures prices in Shanghai surged by their 4 percent daily limit on Friday, supported by growing physical demand in the domestic Chinese market and prospects of continued economic strength following Thursday's staggering 11.9 percent second-quarter growth rate.
"Any time you see an improvement in China, with regards to their GDP or economic growth, you're going to see a direct impact in copper, and that's what we had this week," said one base metals analyst. Technicians pointed to a stronger technical backdrop, with Wednesday's key reversal from support near the $3.52 level and Thursday's break above resistance at $3.6650, as being the catalysts to enable prices to end the week on their highs.
They now pegged new resistance in the September copper contract near $3.76, which represents a break above a multi-month trend line, followed by the May 4 contract peak at $3.7790.
Final estimated futures volumes amounted to 13,677 lots, compared with the 14,906 lots recorded on Thursday. As of July 19, open interest in COMEX copper futures increased 1,547 lots to 91,711 contracts. Fundamentally, falling global stockpiles, labour disruptions in key copper mines in Chile, and expectations of increased demand growth from China have all contributed to the market's recent breakout, analysts said.
Tighter market conditions were reflected in the latest monthly bulletin from the International Copper Study Group which showed world refined copper consumption outpaced production by 267,000 tonnes in the first four months of the year, compared with a surplus of 35,000 tonnes in the year-ago period.
Supply-side fundamentals showed London Metal Exchange-monitored warehouse stocks resumed their downward trend on Friday, falling 1,350 tonnes to 98,675 tonnes. COMEX stocks fell by 113 short tons to 20,952 tons on Thursday, while inventories monitored by the Shanghai Futures Exchange declined 1 percent to 91,182 tonnes in the week ended on Thursday, from 92,002 tonnes the previous week.
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