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Copper cashes in yen gain
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September 1, 1998: 5:21 p.m. ET
Metal racks up biggest one-day climb since 1996 amid soft dollar, stock gain
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NEW YORK (CNNfn) - A rallying Japanese yen, U.S. stock market gains and fund buying boosted copper futures prices to their largest one-day gain in nearly two years Tuesday.
The Comex copper futures contract for December delivery, the most-active contract of trading, settled at 75.90 cents a pound, up 4.55 cents - or 6.2 percent.
Spot September copper climbed to 76.60 cents a pound, also up 4.55, its biggest one-day gain since November 1996.
Japan's yen rose nearly four yen against the U.S. dollar Tuesday in the wake of a massive stock market sell-off on Wall Street Monday. That may boost metal prices by helping revive demand in Asia.
"But not a one day drop in the dollar against the yen does a bullish market make," said Ted Kempf, a metals analyst with CPM Group.
But, he said, "that may be encouraging some people to think that the market is going to turn around."
Meanwhile, a solid bounce Tuesday in the Dow Jones industrial average after Monday's 512-point plunge could signal more demand in the United States.
"There have been a lot of problems: the Nikkei in Japan hit 12-year lows, there was fear the Russians would dump metals, and the Dow is off 20 percent in the last six weeks," said Fred Demler, a minerals economist at E.D. & F Man.
Demler said the stock market gain "helps in that it is an indication of the general health of the economy.
"When people's net worth increases, it means that they could buy a new home, for example," he said. More than 40 percent of U.S. copper is used by the construction industry.
Copper has been hovering near a low of 70 cents a pound for the past several weeks amid fears that Russia's recent market troubles may cause Russia to add supply to the market.
After hitting $1.20 a pound in July 1997, copper prices have been hit by new Asian supply coming on line just as economic woes across the region took a bite out of demand.
While compared to most metals, copper is relatively tight, said Kempf, adding however, "there are a lot of scrap dealers holding on to copper, so if prices go up you may see them pour into the market."
-- by staff writer Jamey Keaten
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