After dropping to a fresh low for the year last Friday, the spot copper price has managed small gains every day of this week.
Front-month copper contracts were trading at $3.38 a pound in afternoon dealings on the Comex in New York, after earlier hitting a high of $3.43 before comments by US Fed chairman Ben Bernanke took the wind out of the sails of those hoping for renewed stimulus in the world's largest economy.
May was the third month of declines for the commodity which is a bellwether for the metals industry and often regarded as an leading indicator for economic growth given its wide-spread use in construction, communication and transport.
Despite the gains copper is still down 15% from its February peak and today's price represents a 24% pullback from historic highs hit at the end of July last year of a shade under $4.50 a pound (more than $10,000 a tonne).
This week copper found support after a surprise rate cut in China – the first since the global financial crisis – which is responsible for more than 40% of global consumption of the metal. News that Jiangxi Copper, China’s top producer, has suspended exports only a month after announcing the program should also support prices.
The world's metal miners have become increasingly dependent on Chinese economic growth to keep profits and revenues flowing. In March, the Chinese government set a target of 7.5% growth for 2012, the lowest since 2004, but official figures showed first quarter 2012 numbers topping that at 8.1%.
However, many observers doubt the government statistics and point to other economic indicators that suggest a much sharper slowdown in the world's second largest economy reports FT:
Power consumption, which along with rail cargo volume and bank loans is seen as a good barometer of economic activity, has slowed sharply in recent months and grew just 3.7 per cent in April over the year before.
The M1 measure of money supply – cash and demand deposits – has contracted by 5 per cent since the start of 2012, having surged 31.8 per cent over the previous two years.
Nationwide property sales are down more than 10 per cent this year.
Newly installed chief executive officer of Chile's Codelco, the world's largest copper producer, yesterday blamed the fall in copper prices on uncertainty in Europe adding that its sticking to its price guidance for the year which does not exclude a pull-back to $3.15 a pound.
Read more about the changing market for copper:
- Global growth shocks drop copper to 2012 low
- Return to the Rio Tinto and fast-forward to the future of copper mine financing
- Copper ETFs: The horror! The horror!
- Vast new copper supplies depressing prices? Don't worry, it's never going to happen
- Copper price: There's something happening here. What it is ain't exactly clear
- Red mettle: Has China cornered the copper market?
- It's worse than you think: Dr. Copper is Dead