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BASE METALS: Copper Futures Bounce After Japan Quake

NEW YORK, Mar 11, 2011 (Dow Jones Commodities News via Comtex) -- ("BASE METALS: Copper Futures Bounce After Japan Quake" published at 14:26 EST mistated copper's percent change this week and the number of recent sessions it has been lower in the second paragraph. The correct version follows.)

By Matt Whittaker
Of DOW JONES NEWSWIRES

Copper futures erased losses to snap a losing streak Friday as an earthquake in Japan sent the dollar lower and prompted expectations about increased demand for the industrial metal as the Asian nation recovers.

The most actively traded copper contract, for May delivery, rose 1 cent, or 0.2%, to settle at $4.2075 a pound on the Comex division of the New York Mercantile Exchange. It still lost 6.7% this week and has been down six out of the last eight sessions, hitting a near-three-month low earlier Friday before rebounding.

The falling prices, which have been exacerbated amid worries high oil prices will be an economic drag, created what some saw as the chance to re-enter the market at a bargain.

"The longer-term picture remains bullish," said Michael Gross, a broker and futures analyst with OptionSellers.com. He noted expectations that copper demand will outstrip supply this year as the economic recovery continues.

Participants Friday were thinking Japan will need more of the industrial metal--widely used for wiring in buildings--to rebuild after an 8.9 magnitude earthquake rocked the country on Friday afternoon, triggering a 10-meter (30-foot) tsunami, forcing tens of thousands of people to evacuate their homes and setting off tsunami warnings for 53 countries around the world.

The quake sent the yen sharply higher as nervous companies and investors sent funds back home, shifting out of the dollar and the U.S. government bond market.

The weaker dollar supported copper by making the dollar-denominated metal less expensive for buyers using other currencies, goosing demand.

Shortly after copper closed, the ICE Futures U.S. Dollar Index was down 0.6%.

News that three key copper-exporting ports in Chile would halt operations Friday afternoon as part of a preventive measure after the earthquake also supported copper.

Those factors helped copper rebound from its lowest point since mid-December on worries about monetary tightening in China, the world's largest copper consumer, and rising warehouse stocks.

Inventories of copper stored in London Metal Exchange warehouses rose 400 metric tons Friday, leaving them at 425,875. Once-a-week data released on Fridays by the Shanghai Futures Exchange showed a weekly rise of 489 metric tons to 158,254. The most recent Comex inventory data, released late Thursday afternoon, were up 205 short tons at 84,668 short tons.

Copper settlements (ranges include electronic and pit trading):
May $4.2075; up 1.00 cent; Range $4.0860-$4.2195
Jul $4.2240; up 0.90 cent; Range $4.1070-$4.2330

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; [e-mail]

(END) Dow Jones Newswires

http://news.tradingcharts.com/futures/6/2/154934726.html