LONDON: Prices of copper and other industrial metals rose on Wednesday after data from China, the biggest metals consumer, showed manufacturing activity rose in February at the fastest pace in more than a decade.
Also lifting metals was a fall in the value of the dollar, including against China’s yuan, making dollar-priced metals more affordable for buyers holding other currencies.
US and euro zone factory activity, however, continued to contract.
Benchmark copper on the London Metal Exchange (LME) was up 1.8% at $9,124 a tonne by 1737 GMT.
Copper reached a seven-month high of $9,550.50 in January on hopes that Chinese demand would rebound after the country abandoned COVID-19 controls.
But prices lost momentum around the Chinese New Year as demand failed to pick up, metal accumulated in Chinese warehouses and the dollar strengthened. “Today’s number gives me more conviction that China is going to be a positive force (for demand),” said WisdomTree analyst Nitesh Shah.
He said that copper inventories remain low globally and prices could rise to $10,000 in the coming months, adding that he was “super bullish” in the long term owing to copper’s increasing use in power generation and transmission as the world moves away from fossil fuels.
JPMorgan analysts said: “We remain relatively more restrained in our demand growth outlook as the drivers of China’s overall economic rebound this year are more consumption-driven rather than metals-intensive investment-driven.”
The bank forecast that copper prices would end this year at about $9,100 a tonne before breaking above $10,000 in 2024 and averaging $9,850 in 2024.
Meanwhile, concerns about global copper supply eased.
Freeport Indonesia said it had restored operations at its Grasberg mine after flooding while a lawyer said a deal was close in a dispute between Panama and First Quantum, which stopped ore processing at its mine in the country.
In other metals, LME aluminium was up 2.7% at $2,436 a tonne, zinc jumped 4.4% to $3,131, nickel firmed by 0.6% to $24,935, lead was up 1.4% at $2,133 and tin gained 1.1% to $25,225.
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