Forexpros – Copper futures rallied on Tuesday, after European officials approved a long-awaited EUR130 billion bailout package for Greece, averting an imminent bankruptcy and boosting the demand outlook for the industrial commodity.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.791 a pound during European morning trade, rallying 2.22%.
It earlier rose by as much as 2.45% to trade at a session high USD3.805 a pound.
At a meeting that lasted into the early of hours of Tuesday, euro zone finance ministers agreed on a EUR130 billion deal slated to reduce Greece’s debt to 120.5% of gross domestic product by 2020.
Private-sector creditors also agreed to take a write-down on their bonds of 53.5%, more than the 50% write-down that had been conceded before the meeting, which is expected to cut Greece’s debt by EUR107 billion.
The decision will help Athens resolve its immediate payment needs and avert a sovereign debt default, as it faces a EUR14.5 billion bond redemption on March 20.
Despite the relief that a deal was accomplished, investors remained cautious amid uncertainty over Greece’s ability to meet the terms of the agreement, while other felt the deal was only a short-term fix that falls short of what Greece needs to prevent financial collapse.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Meanwhile, copper prices continued to draw support from the introduction of fresh monetary easing by China over the weekend.
The People’s Bank of China cut the reserve requirement ratio for major commercial banks to 20.5% from 21%, the second cut in nearly three months.
The move was expected to free up as much as CNY400 billion in an effort to boost lending and spur growth in the world’s second-biggest economy.
Data from China’s General Administration of Customs released earlier showed that refined copper imports by China fell 18% to 335,480 tons in January from a record in December, the first decline in eight months, as importers slowed purchases due to the Chinese Lunar New Year holiday.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for April delivery rose 0.75% to trade at USD1,738.65 a troy ounce, while silver for March delivery rallied 1.35% to trade at USD33.65 a troy ounce.
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