LONDON: Copper was set for its weekly biggest rise in more than two years on Friday, with prices surging to pre-coronavirus crisis levels as Chinese demand rebounds and speculators turn bullish on the metal. Benchmark copper on the London Metal Exchange (LME) was up 1.9% at $6,417 a tonne at 1600 GMT.
It was up more than 6.6% this week - its eighth consecutive weekly gain and the biggest since February 2018 - and trading at its highest since May 2019, having risen from a low of $4,371 in March.
"Chinese demand seems to be coming back not just quickly but quicker than most people expected," said Capital Economics analyst Kieran Clancy. "There's also starting to be a supply risk priced into the copper price.
"In some countries, particularly in Latin America, which produces half the world's copper ore, restrictions are being lifted at a time when infections are rising," he said.
New bank lending in China, the biggest metals consumer, rose 22.3% to 1.81 trillion yuan ($258.29 billion) in June. US producer prices unexpectedly fell, pointing to subdued inflation that should allow the Federal Reserve to keep pumping money into the economy.
Speculators' net long in LME copper rose to 12.4% of active contracts by Wednesday, brokers Marex Spectron said. Copper stocks in Shanghai Futures Exchange warehouses increased by 20,018 tonnes to 137,336 tonnes in the week to Friday, but remain far below their peak in March.
On-warrant stocks in LME-registered warehouses fell by 6,200 tonnes to 88,600, the lowest since Jan. 16. Cash copper has flipped to a premium against three-month metal on the LME, suggesting tighter nearby supply.
The premium for aluminium shipments to Japanese buyers for July to September was set at $79 a tonne, down 3.7% from the previous quarter, sources said. LME aluminium was up 1.3% at $1,686 a tonne, zinc was 1.6% higher at $2,189.50, nickel rose 2.1% to $13,520, lead gained 1.1% to $1,858 and tin was unchanged at $17,340. All were up this week.