New York copper futures rallied overnight to levels last hit December 12, retreated briefly, then renewed their healthy gains Friday morning on a surprising jump in US home sales, traders said.
The pace of US existing home sales unexpectedly rose in February, rising by 3.9 percent to a 6.69 million-unit annual rate as mild weather spurred home buying, the National Association of Realtors said on Friday. Analysts polled by Reuters on average expected US homes had sold at a 6.31 million annual unit rate in February, which would have been down from January's 6.44 million unit pace.
Copper for May delivery renewed its rally after the strong home sales data to rise 3.20 cents, or 1.04 percent, to $3.1050 a lb on the New York Mercantile Exchange's COMEX division. Overnight it charged up to $3.1330, it highest since December 12. The low was $3.0790 a lb.
"February existing home sales was a good number, better than economists had expected. We had been looking for a bit of a pullback after an increase in January, so this is encouraging," said Gary Thayer, chief economist for A.G. Edwards and Sons in St. Louis, Missouri.
Another sign of copper's strength came with a huge drawdown in London Metal Exchange (LME) inventories, which slid 4,125 tonnes to 183,650 tonnes on Friday. LME stocks have fallen by close to 25,000 tonnes since the start of March.
COMEX stocks were down 64 short tons at 36,502 short tons on Thursday. "There was a fairly sizeable drawdown in stocks of over 4,000 tonnes in London. Other than that the market has taken on a life of its own. It's been moving up fairly steadily in the last week and a half with commodities generally," said one New York metals broker.
Strength in crude oil also helped metals prices generally pick up steam, traders said. On Thursday, robust Chinese implied consumption data gave copper a large boost.