US copper futures closed higher on Wednesday with indications of increased Chinese buying underscoring the market's sharp reversal from last week's nine-month lows, analysts said. Thin holiday trading conditions as well as a weaker US dollar were seen aiding in the red metal's firmer tone on Wednesday.
Copper for March delivery settled up 1.65 cents to $3.17 a lb on the New York Mercantile Exchange's Comex division, after dealing between $3.1355 and $3.1960.
Last week, the benchmark March futures contract fell to its lowest level since March 21, at $2.8530, but have since rallied all the way back to their monthly highs at around $3.20 amid better demand signals from China.
"It's the same situation. There's either anticipation or actual Chinese buying back in the market," said Frank McGhee, head precious metals trader with Integrated Brokerage Services LLC in Chicago. By 1 pm EST, volumes were estimated at modest 4,374 lots. This compares with Monday's final count of 6,991 lots. Open interest in Comex copper futures increased 466 lots to 71,767 contracts as of December 24.
Once again, red metal investors in the United States found their early support from strength in Shanghai copper futures prices, which rose more than 1.5 percent on Wednesday and were expected to extend recent gains as Chinese fabricators look to build up their copper inventories ahead of the Lunar New Year, which begins in February.
News that China will remove import duties on refined copper by the first of the year added to the advance, analysts said. "This will make it cheaper for the domestic companies to buy. They can import more at a lower cost to them, so that will just open the buying-gates again," McGhee said. During the month of November, Chinese imports of refined copper totalled 103,410 tonnes, up 5 percent from October but still slightly below traders' expectations.
In Zambia, finished copper production rose to 457,961 tonnes from January to October 2007, compared with 423,639 tonnes in the same period last year, central bank data showed on Wednesday. The London Metal Exchange (LME) remains closed on Wednesday for the Boxing Day holiday. Trading will resume on Thursday, December 27. On Friday, copper for delivery in three months rose $265 to $6,795 a tonne.
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