LONDON: Copper jumped on Wednesday as expectations of improving growth and robust demand boosted sentiment and triggered a buying spree which pushed prices through key resistance levels, creating further upside momentum.
Benchmark copper on the London Metal Exchange was up 2.3% at $6,677 a tonne at 1551 GMT.
Traders said a break above the 50-day moving average, currently around $6,580, had sparked short position covering, which pushed copper to a session high at $6,710.
Prices of the metal used widely in the power and construction industries are up about 50% since the middle of March when economic activity stalled due to Covid-19 lockdowns.
“We are optimistic the global economy will recover over the coming year - that should benefit metals, which are in a better place than energy,” said Danske Bank analyst Jens Pederson.
“Asia and China are doing well, which is important for metals. The direction is up, but it won’t be a straight line.”
China’s factory activity extended solid growth in September as the nation’s crucial exports engine revved up on improving overseas demand. China accounts for about half of global consumption of industrial metals.
President Donald Trump ending negotiations with congressional Democrats over stimulus proposals weighed on industrial metals earlier in the session.
Stocks of aluminium in LME-approved warehouses have fallen nearly 15% since the middle of July to 1.423 million tonnes.
Cancelled warrants, or metal earmarked for delivery, at 21% suggest more aluminium is due to leave LME warehouses over the coming days.
Shrinking supplies on the LME market are behind the narrowing discount - currently down to $24 from nearly $40 two weeks ago - for the cash over the three-month aluminium contract. Three-month aluminium rose 0.9% to $1,781.
Zinc rose 0.3% to $2,371 a tonne, lead climbed 0.8% to $1,796, tin slipped 0.4% to $18,115 and nickel added 0.9% to $14,655.
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