Copper nears multi-year highs on Chinese demand

LONDON: Copper touched a three-week high on Monday as demand from top consumer China and the threat of strikes by miners in Chile pushed prices closer to 27-month highs reached in September, though a strengthening yuan limited gains.

Benchmark three-month copper on the London Metal Exchange (LME) was down 0.2% at $6,748 a tonne at 1600 GMT after going as high as $6,785.25.

The metal used in power and construction hit $6,877.50 on Sept. 21 - up 57% since hitting its lowest this year in March - as Chinese industry reopened and speculators bought into the rally.

Strong Chinese consumption is now priced in and gains are likely to slow, said Capital Economics analyst Kieran Clancy, warning that new coronavirus outbreaks could derail demand.

"We are going to enter a more gradual, steady climb upwards," he said.

CHINA STIMULUS: China will invest close to $900 billion over the next five years to develop the country's copper-intensive power grids, state media reported.

CHINA EXPORTS: China's exports are likely to have achieved a fourth straight month of gains in September, a poll showed.

CHINA OUTPUT: Copper cathode production by Chinese smelters in September were up 3% from August, with output over the first nine months of the year down 1.6% year on year at 6.26 million tonnes, researchers Antaike said.

YUAN: The yuan fell from an 18-month high against the dollar after China's central bank lowered reserve requirements for some foreign exchange trading. A weaker yuan makes metals more expensive for Chinese buyers.

PREMIUMS: Chinese Yangshan copper premiums rose to $53.50 a tonne, the highest since Sept. 23 but still far below the 2020 peak of $113.50.

MARKETS: US stocks climbed strongly.

CHILE: The union at Chile's Escondida mine rejected BHP's final offer in contract negotiations, but the miner said it would meet the union again in an effort to avoid strike action.

POSITIONING: Speculators on the Comex exchange cut their net long position to 69,806 contracts from 87,308 contracts in late September.

COLUMN: Speculators' commitment to copper's bull narrative seems largely unshaken, writes Andy Home.

OTHER METALS: LME aluminium was up 0.6% at $1,853 a tonne, zinc rose 0.5% to $2,445, nickel fell 0.4% to $15,165, lead added 1.6% to $1,836.50 and tin was 0.2% down at $18,240.