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Will Higher Demand in China and Decline of Dollar Cause Copper to Rise?

October 14, 2009 at 22:56 by Vladimir Vyun

Copper prices went up after demand for the metal in China increased and the dollar fell. The U.S. dollar slumped to the lowest since August 2008 against a basket of six major currencies. The decline of dollar causes investors to buy commodities as an inflation hedge.

China is the biggest metal buyer in the world. The country have imported 399,052 metric tons of copper in September, 23 percent up from August. Copper futures have doubled after China’s demand jumped in the first half of 2009 but Chinese imports have declined in the two previous months.

Inventories monitored by the LME climbed to 353,225 tons, the highest since May 18. The stock-to-consumption ratio stays low, despite inventory increases.

December delivery futures for copper went up $0.05 (1.8 percent) to $2.8445 per pound on the Comex unit of the New York Mercantile Exchange. Delivery for copper in three months gained 1.3 percent to $6,220 per ton on the London Metal Exchange.

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