Copper extends gains on China demand hopes, supply risks

Copper prices rose on Friday as hopes of strong demand in top metals consumer China and risks of supply disruptions outweighed concerns that a resurgence in COVID-19 cases in Europe could weaken the global economic recovery momentum.

Three-month copper on the London Metal Exchange was up 0.3pc at $6,769 a tonne by 0703 GMT, extending gains to a third session.

The most-traded November copper contract on the Shanghai Futures Exchange closed 0.5pc higher at 51,470 yuan ($7,660.82) a tonne. Other LME base metals also rose.

"Industrial metals look set to shine despite the economic gloom," commodity strategists at ANZ said in a note.

"Ample Chinese fiscal measures provided a much-needed boost to the sector (while) supply-side issues are tightening the market balance."

They added that copper has benefited mostly from pandemic-related mine disruptions in Chile and Peru.

"While the resurgence of cases is still a risk for supply, resurfacing labour strike risks in Chile will be another headwind for supply recovery," ANZ strategists said.

FUNDAMENTALS

Chilean copper miner Codelco said it was producing at full capacity and aims to meet 2020 output targets.

Aurubis, Europe's biggest copper smelter, will offer unchanged 2021 copper premiums to its customers of $96 per tonne above LME prices.

Nickel Mines Ltd will buy 70pc of Indonesia's PT Angel Nickel Industry for $490 million in a deal that will double its nickel production within two years.

In London, nickel rose 0.9pc to $15,555 a tonne, aluminium was up 0.3pc at $1,858 a tonne, and zinc advanced 0.3pc to $2,433.50 a tonne.

In Shanghai, nickel jumped 1.3pc, aluminium gained 0.3pc, but zinc slipped 0.5pc. Lead and tin both lost 0.1pc.