Copper surged more than 5 percent to a 16-month high on Thursday as speculation that US infrastructure spending could jump under a Republican administration unleashed a wave of interest in industrial metals. Zinc hit a 5-1/2 year peak and nickel was at its highest since July 2015 on expectations that US president-elect Donald Trump could boost domestic construction spending.
London Metal Exchange copper hit a peak of $5,714 a tonne on Thursday, its highest since July 2015, and closed up 3.5 percent at $5,601 a tonne, extending Wednesday's 3.4 percent rise. The metal has climbed more than 15 percent so far in November and is on track for its biggest monthly rise since March 2009, when the impact of China's 4 trillion yuan stimulus programme started to filter through.
Copper had lagged other base metals earlier this year, rising just 3 percent this year to the end of September versus a 20 percent rise in nickel and a 44 percent surge in zinc. Analysts cautioned, however, that the metal was showing signs of becoming overstretched.
"Copper..., zinc, and to some extent nickel should benefit from any increased spending on infrastructure, but it's hard to do any more analysis because we just don't have the details," Societe Generale analyst Robin Bhar said. "We're seeing short covering and fresh buying from the funds, maybe more on hope than reality. Trump has talked about large-scale investment in infrastructure, but there are no specific details attached."
Copper volumes on the London Metal Exchange reached their highest since January 2015 on Wednesday, with 332,638 lots traded. Sources said activity was mainly speculative. Aluminium reached its highest since May 2015 at $1,783 a tonne, and ended the day up 1 percent at $1,770.
Stock markets rose and the dollar steadied in a remarkable snapback from the shock of Trump's presidential victory. "Whilst the exact economy policy outline of President Trump is still uncertain, measures restricting global trade, which has been subdued anyway, would do a lot of damage to the cyclical metals," Bank of America Merrill Lynch said in a note.
Zinc, widely used in alloys, hit its highest since early 2011 on Thursday at $2,575 a tonne, before closing at $2,524 a tonne, up 1.9 percent. Tin closed 1.1 percent higher at $21,505 a tonne. Nickel ended the day down 0.3 percent at $11,540, having earlier peaked at $11,900, while lead closed 0.6 percent higher at $2,154.
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