LONDON: Copper prices hit their highest in over a year on Thursday, spurred by hopes of a faster recovery in top consumer China and supply concerns in the world's biggest producer Chile.
Three-month copper on the London Metal Exchange (LME) was up 0.9% to $6,290 a tonne at 1617 GMT, after touching its highest since May 2019 at $6,360.
The metal, used as a gauge of economic health, is up 2.7% so far this year and has largely recovered from a sell-off sparked by the Covid-19 pandemic.
"The fundamental backdrop is improving and clearly copper is reflecting hopes of a V-shaped or U-shaped economic recovery," independent metals consultant Robin Bhar said.
"The key driver is the disruptions in Chile. That is sending some alarm through the market, and although the closures are temporary, they could be sizable."
China's factory gate prices fell for a fifth straight month in June, although signs of a pickup in some parts of the sector suggest a slow economic recovery remains intact.
Speculators have bet prices for LME copper will rise, with the net long position climbing to 11% of contracts as of Tuesday, estimates from broker Marex Spectron showed.
On-warrant stocks of copper in LME-registered warehouses continued a downward trend, shedding 4,000 tonnes to 94,800 tonnes, the weakest since January.
This has helped drive the premium for cash over the three-month contract to its highest since April 2019 this week compared with a discount for the last 14 months.
The premium stood at just under $1 on Thursday.
China's major copper smelters boosted cathode production in June by 0.6% year on year to 699,000 tonnes, Antaike, the research arm of the country's nonferrous metal association, said.
LME aluminium hit a four-month high, but was later down 0.3% to $1,665 a tonne, zinc gained 0.8% to $2,147, lead added 1.3% to $1,836.50, while nickel eased 2.2% to $13,200. Tin was up 1.5% to $17,328 a tonne, after touching its highest since Jan. 23.