MELBOURNE: London copper jumped more than 2 percent on Monday, leading a broad rally in industrial metals, amid prospects for better demand in top consumer China and smaller growth in supply.
Chinese investors whose rush into copper hauled it to 17-month highs this month say infrastructure spending and government reforms will keep the metal well supported for the rest of this year and into 2017.
The likelihood of rising U.S. interest rates, better-than-expected Chinese consumption this year and smaller growth in copper mine supply for 2017 improved the consensus outlook for copper, said ANZ analyst Daniel Hynes.
"Looking at copper technicals, it's looking overbought, but when you place it against the metals complex, it looks like it can go higher," he added.
Three-month copper on the London Metal Exchange had climbed 2.5 percent to $5,561 a tonne by 0742 GMT, recovering from last week's 2.3-percent decline.
Shanghai Futures Exchange copper gained 2.1 percent to close at 45,120 yuan ($6,542) a tonne.
In the physical market, copper premium in Shanghai stayed firm at $95 a tonne, up from $70 a month ago.
However, premium for metal to be shipped to Shanghai fell by $15 to $80 a tonne last week, suggesting some traders have become reluctant to source metal from overseas.
Investors raised their net-long position in COMEX copper futures and options in the week to Nov. 15 to a record for the second straight week, U.S. Commodity Futures Trading Commission data showed on Friday.
Elsewhere on LME, nickel rose nearly 3 percent to $11,165 a tonne and zinc and lead were each up around 2 percent.
LME aluminium rose 1 percent to $1711.50. Reflecting a lack of immediately available supply, LME cash aluminium traded at a $13.90 premium against the benchmark contract, the highest since March.
In Shanghai, aluminium surged 4 percent to 14,090 yuan a tonne, due partly to rising prices of coal, a key input material, and after new Chinese regulations over truck loads disrupted transit.
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