Copper exchange traded funds and notes were higher Wednesday on reports of improving demand from China, although worries over Europe’s debt logjam kept a lid on the gains.
The iPath Dow Jones UBS Copper ETN (NYSEArca: JJC) was up 01.2% at last check Wednesday. The fund is still testing its 50-day exponential moving average.
On Tuesday, copper futures rose to a one-week high after the General Administration of Customs revealed China, which accounts for 40% of global copper demand, imported 508,942 metric tons of the metal in December, or a 13% gain for the month and up 48% year-over-year, according to a Wall Street Journal report.
Copper futures gained almost 3% Tuesday.
“The copper-imports number was good, and seems to be improving,” Bill O’Neill, principal with commodities firm Logic Advisors, said in the WSJ article. “When you combine that with some of the comments from Alcoa about metals demand in general, I think copper benefited from that as well.”
Alcoa Inc. (NYSE: AA) projected Chinese demand for copper will expand by 12% in 2012.
Copper “demand growth remains healthy,” according to RBS analysts. “Consumption in mature economies will likely slow, but most of the growth forecast for the next few years is still expected to come from China, where demand is holding up well.”
However, with an early Chinese New Year, China’s offices and exchanges will be closed during the last week of January, report Susan Thomas and Harprett Bhal for Reuters.
“In the coming weeks the market is expected to be a bit quiet because the Chinese will be off for the Lunar New Year so we are likely to continue to trade off news about the euro zone debt crisis,” Andrey Kryuchenkov, analyst at VTB Capital, said in the Reuters article.
“It remains to be seen whether the bounce we are currently seeing in metals will have some legs to it,” Edward Meir, an analyst with INTL FCStone, wrote in a note. “Euro-related bond fears are not far underneath the surface and still have the capability of snuffing out this rally.”
iPath Dow Jones UBS Copper ETN
For more information on copper, visit our copper category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.