Although analysts don’t expect the latest copper rally to stick around for long, copper performed well earlier this week, rising more than seven percent yesterday. LME’s three-month copper gained 7.2 percent, while COMEX copper set for March delivery rose a much higher 16 percent; the highest rates since December 4.
As with many metals, the past year didn’t deal a superior hand to copper, with prices dropping to half their previous levels during 2008. Thanks to waning demand, inventories continued to grow, and many smelters chose to decrease output. But this week, copper is sitting well, since copper futures finally returned to $1.50 per pound Tuesday morning.
It seems that investors decided to stock up on copper before major commodity indexes recalculate various commodities and their weightings in early January. The New York Mercantile Exchange’s COMEX division, for example, expects to raise copper’s weighting during the re-weighting next week. This is enough to slow copper’s gains, but there’s more bad news from LME, where the LME copper warehouses still aren’t faring well. The LME-monitored stocks added 1,450 tons yesterday, bringing the total surplus to 343,500 tons, their highest level since February 2004.