LONDON: Copper prices soared to their highest level in more than five months on Tuesday due to strong demand prospects in top consumer China and worries about supplies from Chile, the world's largest producer of the red metal.
Benchmark copper on the London Metal Exchange touched its highest since Jan. 21 at $6,195 a tonne. It was up 0.9% at $6,182 a tonne at 1600 GMT.
Prices of the metal used widely in the power and construction industries are up more than 40% since hitting four-year lows in March.
"There is optimism about economic recovery and demand is in good shape," said Commerzbank analyst Eugen Weinberg. "The copper market is also pricing in output disruptions in Chile because of Covid."
China's Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.2 last month after the fastest pace of growth since December and up from May's 50.7.
A survey of purchasing managers in the US manufacturing sector also showed expansion, while in Europe the contraction eased.
"Looking at historical recovery cycles - 2005, 2009-10, 2013, and 2017 - August is extremely important," analysts at BMO Capital Markets said in a note.
"This is the month of most dramatic price increases, which in our view is linked to Northern Hemisphere purchasing managers returning from vacation to better order books."
Concern about nearby copper supplies on the LME market, due to a large holding of warrants, pushed the premium for the cash over the three-month contract to $6.8 a tonne on Monday compared with a discount for the last 14 months.
The premium returned to a discount of $3 a tonne on Tuesday, but worries about tightness on the LME market remain due to cancelled copper warrants - metal earmarked for delivery - at 47% of total stocks at 195,825 tonnes.
Aluminium was little changed at $1,635, zinc rose 0.1% to $2,065, lead added 1.4% to $1,823, tin slipped a touch to $17,000 and nickel climbed 1% to $13,470 a tonne.
Comments
Comments are closed.