Commodity Blog

Copper prices are surging on Wednesday after new US economic data propelled the industrial metal to a one-week high. The red metal was also supported midweek by the return of Chinese investors following a holiday.

May copper futures rose $0.061, or 2.34%, to $2.673 per pound at 16:37 GMT on Wednesday on the New York Mercantile Exchange. Copper prices suffered a 1% drop on Monday and posted small gains on Tuesday. Year-to-date, copper has climbed more than 6% on a sliding US dollar, supply disruptions, and growing international demand.

The industrial metal rose amid a glowing US jobs outlook from the ADP National Employment Report. The preview of the non-farm payrolls showed that US private employers added 263,000 jobs in March, higher than the initial forecasts of 187,000. This gave the markets some much needed optimism and a sign that the economy may be roaring once again.

After a holiday break, China, the world’s largest buyer of industrial metals, returned to buying.

The red metal has benefited this year from a weaker greenback as the US dollar has dipped to multi-week lows. A declining US dollar makes commodities like gold, silver, and copper cheaper for foreign investors to purchase.

Copper’s rise comes as Chile, the world’s biggest producer of copper, was urged by industry leaders to adopt new technologies and improve labor relations in order to continue its global standing. Despite controlling one-third of the planet’s supply of copper, Chile has seen its productivity tumble in recent years. For instance, its mining operations were recently disrupted at Escondida over disputes between the union and operators.

Speaking at CRU World Copper Conference in Santiago this week, Danny Malchuk, president of operations at BHP Billiton’s Minerals Americas, told the audience that Chile needs to implement these strategies to remain competitive.

If we [do not] take a proactive approach, the copper industry in Chile will reduce its global position in the next 25 years in line with the diminishing quality of our assets.

Gold is taking a hit midweek. June gold futures dipped $9.30, or 0.74%, to $1,249.10 per ounce.

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