LONDON: Copper touched its highest in more than two years on Friday as speculators extended their buying spree on a recovery in top metals consumer China while the dollar weakened. Benchmark copper on the London Metal Exchange (LME) hit $6,850 a tonne, its highest since June 2018, before paring gains to $6,837 by 1615 GMT for a rise of 0.8%.
Copper has surged by 55% since hitting 45-month lows in March and this marks the sixth consecutive week of weekly gains. "It's just phenomenal, the strong market we're seeing right now. It's really the China story and also about the overall momentum that has come into the commodities space," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"As long as we stay above the key uptrend, which today is at $6,700, then there's no reason for the speculators, who have accumulated quite a sizeable long position in copper, to make any adjustments." Data this week showed that China's industrial output accelerated the most for eight months in August while the OECD upgraded its economic growth outlook for China.
The dollar index eased due to US election uncertainty and the latest US-China political tensions, making it cheaper to buy metals using other currencies. Physical copper premiums in China continued to fall, losing $4.50 on Friday to $59 a tonne, data showed, extending a decline from highs of $100 six weeks ago. That is the lowest level since the start of April.
LME zinc gained 1.1% to $2,542 a tonne. The net long has risen to 7.8% of open interest by Wednesday's close from 4.9% a day earlier, according to estimates by broker Marex Spectron. Buying has continued by Commodity Trade Advisor funds, Alastair Munro at Marex said in a note. LME aluminium rose 0.7% to $1,792.50 a tonne while lead fell 0.1% to $1,908.50, nickel shed 1.2% to $14,910 and tin eased by 0.4% to $18,120.
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