Copper up on U.S. debt deal optimism, ahead of China trade data

Copper rose for a second day on Friday on optimism that U.S. lawmakers will come to an agreement and extend the nations debt limit as talks continue. Chinese trade data on Saturday may show sustained demand from the worlds biggest consumer of metals.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December rose by 0.12% to $3.252 per pound at 8:58 GMT. Prices held in range between days high and low of $3.262 and $3.239. The metal added 0.5% on Thursday after falling the most since September 12 on Wednesday and trimmed its weekly decline to 1.4% on Friday.

Copper futures drew support after House Speaker John Boehner and other Republican leaders met with President Barack Obama on Thursday to discuss a short-term solution of the debt ceiling deadlock, pushing back the deadline from October 17 to November 22 with no policy conditions attached. President Obama was reported to have rejected the plan, but Republican Paul Ryan told reporters he had neither accepted nor rejected the offer. Despite the lack of conclusion, the discussion and proposal were viewed by market players as a step forward and fanned optimism that the political standoff will be resolved soon. The debt limit vote could be held as early as today.

Meanwhile, the industrial metal also received a boost amid expectations that Chinese trade data tomorrow might show that the Asian countrys imports rose by 7% in September, marking the same advance as in August. Any upbeat or downbeat data from China cause wide fluctuations in the metals pricing as the nation is the worlds biggest consumer, accounting for around 40% of global demand. September exports are expected to have risen by 6%, down from 7.2% in August, and the countrys trade surplus likely narrowed to $27.70 billion from $28.61 billion a month earlier.

Yu Yi, an analyst with SDIC CGOG Futures Co. in Beijing, said for Bloomberg: “We may see a relatively high copper imports for September tomorrow as recent economic indicators show a stable Chinese economy.”

The metal was pressured earlier in the week following some downbeat data from Europe. France’s manufacturing output rose by 0.3% in August, underperforming analysts’ projections for a 0.6% increase. Year-on-year however, production contracted by 3.8%, exceeding expectations for a 3.7% decline. In Italy, manufacturing production fell by 0.3% in August, compared to forecasts for a 0.7% advance, while year-on-year output declined by 4.6% after it retreated by 4.2% in the preceding month.

On Wednesday, Great Britain’s manufacturing production also disappointed by falling 1.2% in August, confounding expectations for a 0.4% advance after July’s 0.2% expansion. Year-on-year, output on the island contracted by 0.2% after it slipped 0.3% in July, rebutting analysts’ projections for a 1% jump. Germany’s industrial production however managed to bring some positive sentiment. The leading EU nation’s industrial output rose by 1.4% in August after retreating 1.1% in July and exceeded forecasts for a 0.9% jump. A 0.3% advance was marked year-on-year, defying expectations for a 1.5% contraction.

Prices were also pressured on Wednesday after the International Monetary Fund trimmed its global growth forecast for this year to 2.9%, down from previously estimated at 3.1% in July. Next year’s projection was trimmed to 3.6% from July’s prediction for 3.8%.