US copper futures settled up and near session highs Friday amid hopes that a proposed fiscal stimulus package from US President George W. Bush will be enough to stave off a recession in the world's largest economy, analysts said.
The proposed package met with a favourable response from red metal investors and sparked a further amount of short-covering going into the long holiday weekend.
The New York Mercantile Exchange energy and commodity markets will be closed on Monday for the Martin Luther King Jr holiday. Trading will resume on Tuesday.
Copper for March delivery closed up 5.25 cents or 1.6 percent to $3.2345 a lb on the New York Mercantile Exchange's COMEX division, after dealing between $3.1450 and $3.2455. Final estimated futures volumes totalled 18,196 lots, compared with the 15,487 lots recorded on Thursday.
As of January 17, open interest in COMEX copper futures rose by 224 lots to 83,203 contracts open. The White House called for a package of tax cuts and other measures totalling around $140 to $150 billion to shore up the fragile US economy, under pressure from the subprime mortgage crisis and credit crunch.
Federal Reserve Chairman Ben Bernanke, in testimony before the House of Representatives' Budget Committee on Thursday, also backed the idea that the struggling economy needed rescue. Fundamentally, one supportive factor this week has been the steady decline in London Metal Exchange-registered copper warehouse stocks, down for the ninth consecutive day.
LME copper stockpiles fell by 2,325 tonnes to 183,225 tonnes on Friday, compared with 201,000 on January 4. COMEX copper stocks held steady at 14,078 short tons as of Thursday. Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 1.4 percent to 26,555 tonnes in the week ended Thursday from 26,187 tonnes the previous week.
China's refined copper output rose to 3.5 million tonnes in 2007, the vice secretary general of the China Nonferrous Metals Industry Association said on Friday. On the refining side, top Japanese smelters and BHP Billiton Ltd/Plc have agreed on copper fees of $45 per tonne and 4.5 cents a pound for 2008, lower than those reached between Chinese smelters and the mining giant last year. LME copper for delivery in three months was last indicated at $7,141/7,142 a tonne, up $141 or 2 percent from Thursday's closing level.