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Columbus Day – No Holiday for Global Markets

By Jim Williams

Copper prices see a slight boost to start the week based on export-Import data out of China.

China’s exports increased 15.3 percent from a year earlier, while imports – expected to show minimal increase – rose seven percent, leaving a trade surplus of $31 billion. Those numbers were a far cry from the expected $41 billion.

The 15.3 percent export growth is the fastest pace since February 2013. September copper imports rose nearly 15 percent from the month before, the strongest import growth since February this year. “We need to see another month of that type of growth to really be confident that it is really a restocking trend, rather than opportunistic buys ahead of China’s holiday,” said analyst Daniel Hynes of ANZ in Sydney. “Still, I would say the selling has been overdone. The longs are looking for any opportunity to build some initial positions – but certainly no follow through at the moment,” he said.

Investors believe the better-than-expected export and import data could ease some of the widespread concerns about the health of the global economy, adding to People’s Bank of China Governor Zhou Xiaochuan’s speech on Saturday saying that Chinese economic growth will continue to grow at a “steady pace” despite growing market and liquidity risks.

“Economic indicators suggest that the Chinese economy will continue to expand at a steady pace, while inflation is expected to stay mild amidst the stable macroeconomic environment,” he said.

“An increase of exports and imports for China suggests that global demand is not falling apart as strongly as some might have expected,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, told Bloomberg News.

Reports out of China predict the country’s investment growth should pick up in the coming months thanks to construction of water conservation projects and other infrastructure.

All Eyes on Europe?

Did you know Europe as a region is third in global demand of copper?

Market players do. They are looking ahead to the release of key euro zone data for further indications on the strength of the economy and the future path of monetary policy.

The ZEW Institute is scheduled to release its closely watched report on German economic sentiment for October, a leading indicator of economic health.

Fears that Germany, the euro zone’s largest economy, is being dragged into a recession mounted last week after data pointed to unexpected weakness in manufacturing and exports.

The euro zone is also to publish data on industrial production for September amid ongoing concerns the region’s economy is floundering and may require fresh stimulus measures from the European Central Bank.

In Other News…

* Three-month copper on the London Metal Exchange had slipped to $6,696 a ton from the previous session when it tipped its highest since Sept. 30 at $6,737 a ton. Prices are grinding upwards from five-month lows at $6,600 a ton touched on Oct. 2.

* The most-traded December copper contract on the Shanghai Futures Exchange climbed 0.6 percent to 47,850 yuan ($7,812) a ton.

* The Fed should err on the side of caution in its coming decision about when to raise interest rates for fear of upending the U.S. recovery in a weak world economy, Chicago Federal Reserve President Charles Evans said on Monday.

* China’s surprisingly strong trade performance in September may reduce the chances of aggressive policy action such as an interest rate cut, but the prospects of a prolonged property slump suggests more measures are still needed to shore up the economy.

* Freeport-McMoRan Inc.’s Indonesian unit can resume open-pit mining at its Grasberg complex, one of the world’s biggest copper mines, after it agreed to improve safety following a fatal accident last month, a government official said on Monday.

* The world’s top copper producer Codelco will offer its customers in Europe premiums of $112 per ton in 2015, unchanged from last year, reflecting weak market conditions due to poor demand and rising supply, sources said on Monday.

*News clips compiled from Reuters

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