Copper off to the races after Wen comments
Copper saw a strong start to the trading week adding 1.8% following pro-growth comments by the Chinese premier Wen Jiabao over the weekend.
"We should continue to implement a proactive fiscal policy and a prudent monetary policy while giving more priority to maintaining growth," Jiabao said on Sunday according to Reuters.
Spot copper prices were quoted at $3.53 in New York in late trade, up more than 6 cents on the day. On Friday copper fell to a 4-month low of $3.44 a pound in New York trading on mounting worries about the global macro-economic outlook and a slowdown in China.
The Washington Post warned that although the shift in policy "would mean more room for local governments to undertake large-scale investment projects and could mean more central government support," there was "no indication that Beijing would open the credit taps as it did in the wake of the financial crisis."
Today's copper price is still a more than 20% drop from historic highs hit at the end of July last year of a shade under $4.49 a pound.
2011 saw dramatic price collapses for copper. From the record high in July the metal plunged to $3.07 at the beginning of October, a 31% drop in little over two months. In September 2011 alone, the price dropped 26%, losing over $1/pound during the month.
During the US subprime mortgage crisis copper prices declined by more than two-thirds within six months – from $3.96 on June 30 2008 to $1.29 on the last trading day before Christmas of that tumultuous year.
Like many commodities copper's fortunes are driven by the Chinese consumption boom over the last ten years.
Recent price volatility is in sharp contrast to historical trading patterns for copper. During the previous decade from May 1992 to May 2002 copper traded within a 60c band.
Copper's price spikes up and down this year have caught the attention of industry observers with some saying that there are rogue traders operating in the market and that prices are being distorted by dominant players.