Copper was the main beneficiary of US President Obama’s State of the Union speech in Congress yesterday that promised investment in infrastructure.
The US President said that money saved from pulling out of Iraq and Afghanistan would be used to build high-speed railway lines, and repair bridges and roads in the country.
As a result, copper was trading at $8,406 (£5,423) at around 7:30am GMT this morning. This is its highest point of 2012 so far, and compares very favourably with the $7,485 (£4,823) low point seen on 5 January.
Aluminium has also gained over the month and yesterday’s price on the LME was $2,225 (£1,428), which again shows gains on the January low of $2,028 (£1,307) seen on 5 January.
However, trading volumes are very low this week with China enjoying its New Year celebrations.
The eurozone crisis continues to dominate the markets, and while the likes of copper and aluminium are benefitting from potential infrastructure improvements in the US and continuing demand from China, other commodities are staying low.
Brent crude oil continues to hover around the $110 level, while cotton keeps moving lower. Today’s cotton price is $90.81 and the charts show consistent falls in price after the material hit $160.65 in June 2011. Although the price of PET has fallen over the past few months, and there is often a correlation between the price of cotton and PET, the fundamentals of PET seem to have ensured it has seen a small price increase recently rather than the continued fall seen with cotton.
Market data continues to be mixed. Germany’s IFO business sentiment index, which survey attitudes in over 7,000 companies, was up to 108.3 this month compared to forecasts of 107.6. The German economy continues to be very strong, with the weak euro helping its manufacturers even more.
However, the UK reported a 0.2 per cent decline in its economy in the fourth quarter of 2011 this morning, and if this contraction were to continue into Q1 of 2012, then the UK would officially be in recession.