Firmer China factory data lift copper, other base metals

LONDON: Copper prices rebounded from two sessions of losses on Wednesday on better-than-expected private factory data from top metals consumer China.

Aluminium prices extended gains to the highest in over a month on supply worries from the widening war in the Middle East, a key producer of the metal.

Benchmark three-month copper on the London Metal Exchange gained 1.5% to $13,150 a metric ton by 1030 GMT.

LME copper had shed 3% over the past two sessions on worries that the Mideast conflict will undermine economic growth and metals demand.

China’s factory data was mixed, with the official purchasing managers’ index tracking large state-owned manufacturers coming in slightly weaker.

But the metals market focused on a second survey of smaller, private producers that topped analysts’ forecasts, with new order volumes rising for the ninth successive month.

“The PMIs were good, we’re going in the right direction, with positive growth again and good orders. People are going long again on copper,” said Robert Montefusco at broker Sucden Financial.

“But we’ve got to keep an eye on what’s happening in the Middle East because we’ve been having some very large swings this week.”

LME aluminium climbed 1.7% to $3,305 a ton, having touched $3,318 for its strongest since January 29 after Norway’s Norsk Hydro announced on Tuesday a controlled shutdown of its aluminium joint venture in Qatar.

LME aluminium has gained 5% this week after the U.S. and Israel launched attacks against Iran over the weekend. The region accounts for around 8% of global aluminium capacity.

The disruption “hits a market that was already tight,” Ewa Manthey, commodities strategist at ING, said in a note.

Falling LME inventories, elevated premiums and a tightening spread between the LME cash contract and benchmark three-month indicated tight supply even before the conflict, she added.

Among other metals, LME zinc gained 1.3% to $3,312, lead rose 0.8% to $1,950.50, nickel advanced 3.3% to $17,680 and tin jumped 6.1% to $51,800.