DJ Copper Ends Higher Despite Drop In U.S. New Home Sales
–Comex September futures up 0.6% at $3.3485/lb
–Copper climbs despite drop in U.S. new home sales
–Traders focus on stronger global manufacturing data
By Tatyana Shumsky
NEW YORK–Copper prices settled higher on Friday as traders looked past weaker U.S. new home sales data to focus on broad gains in global manufacturing activity.
The most actively traded contract, for September delivery, rose 1.85 cent, or 0.6%, to settle at $3.3485 a pound on the Comex division of the New York Mercantile Exchange.
U.S. new homes sales fell 13.4% in July, their steepest drop in three years, the Commerce Department said Friday. The annual rate of newly built home sales in July, at 394,000, is the lowest since October 2012.
“That is in fact fairly bad news, but the market seems to be shrugging it off,” said Sterling Smith, a futures specialist at Citi Institutional Clients Group.
Copper electrical wires and plumbing is widely used in residential and commercial construction.
Still, the weaker data should have been expected by most traders given the recent rise in interest rates, Mr. Smith added.
“When interest rates go up, you’re basically raising the price of a house to a consumer,” Mr. Smith said, adding that this often keeps potential buyers out of the market.
Copper prices also continued to draw strength from Thursday’s bevy of upbeat factory activity data.
Top copper consumer China saw manufacturing activity expand in August, according to HSBC’s Flash Purchasing Managers’ Index. Europe, No. 2 in copper consumption, reported the fastest pace of factory activity in August for more than two years, while U.S. manufacturing rose to a five-month high.
The across-the-board improvement buoyed hopes of greater demand for the metal used in everything from computers and tractors to air-conditioners.
Copper prices also strengthened on data showing a rebound in German economic activity, with second quarter growth up 0.7% in Europe’s largest economy.
“Considering we got a lot of good manufacturing and other (economic) data, this is not a figure that’s going to swing the market much,” said Bill O’Neill, a principal at Logic Advisors.
Copper settlements (ranges include electronic and pit trading): Aug $3.3520; down 1.90 cents; Range $3.3400-$3.3610 Sep $3.3485; down 1.85 cents; Range $3.3150-$3.3600