Positive Trade Information out of China Fuels Copper ETF Surge

Jacob Harper  |

On Aug 8 China released their much anticipated trade numbers that would provide concrete information over the economic health of the country. Prior to the release of the trade data, China bears had been speculating that China’s “credit binge” would finally catch up with the country, and cause an economic contraction, or even a crash.

The numbers released by Beijing, however, were anything but dire. Both exports and imports increased considerably more than analysts had expected, and the country’s construction boom is expected to continue.

The continuance of the construction uptick is of particular importance in fueling demand for copper, as China is the world’s leader in copper consumption. Previous fears that growth would slow and China would pull back on consumption had caused copper prices to drop over 20 percent on the year.

With the positive numbers out of Beijing on Aug 8, copper surged. Copper ETFs in turn experienced a spike. iPath Dow Jones UBS Copper Total; Return Subindex (JJS) went up 2.66 percent to hit $40.12 a share.  It’s still down 12.72 percent on the year, however.

United State Copper Index (CPER) went up 2.53 percent to hit $22.25 dollars a share. First Trust ISE Global  Copper Index Fund ($CU) was the biggest gainer among copper ETFs, jumping 4.82 percent to his $21.09 a share.

China will relase more economic data on Aug 9, encompassing inlfation, retail numbers, and industrial output.

Copper has been on a streak in August, Although analysts have tempered expectations slightly by pointing out there will likely be a surplus of the metal in 2014.  Amid pessimism concerning the Chinese economy, on July 30 copper had dropped as low as $3.05 a pound. Copper rose to $3.23 a pound on the day.

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