China data and vaccine optimism lift copper price

  • Benchmark three-month copper on the London Metal Exchange (LME) added 0.4% to $7,784 per tonne.
  • The metal, seen as a bellwether of global economic health, has gained more than 80% .
16 Dec, 2020

Copper prices were supported on Thursday by factory data from China showing economic growth in the metal's top consumer and also helped by the COVID-19 vaccine rollout in major economies.

Benchmark three-month copper on the London Metal Exchange (LME) added 0.4% to $7,784 per tonne by 1729 GMT.

The metal, seen as a bellwether of global economic health, has gained more than 80% since March lows, mainly on the back of a rebound in the Chinese economy.

Data showed on Tuesday that China's factory output grew at the fastest pace in 20 months in November driven by revived consumer spending and a gradual easing of COVID-19 restrictions in major trading partners.

"The data, which was mostly in line with expectation, can be interpreted positively because it confirms that China is on track for solid growth and that they have already overcome what they lost from the pandemic," said Commerzbank analyst Daniel Briesemann.

China accounts for nearly half of global copper consumption estimated at 24 million tonnes.

LOCKDOWN RISK: Markets were supported by a vaccine roll-out in the United States and Britain but the risk of a resurgence in coronavirus cases has prompted some European countries to impose strict lockdowns.

POSITIONING: Bullish bets on copper by funds showed no signs of abating, with positioning on LME and COMEX at high levels, according to estimates by Marex Spectron and data from the US Commodity Futures Trading Commission.

SMELTING: Global copper smelting activity rose in November, having shown no growth the previous month, with the largest increases in Europe, China and South America, data from satellite surveillance of copper plants showed.

NICKEL: Protests have caused nickel supply disruptions in New Caledonia. This has helped to propel benchmark nickel prices to a 15-month high of $17,880 a tonne but ended at a steady $17,590.

Although its New Caledonia mines are blocked, Eramet SA's local unit transported 19,000 tonnes of ore this weekend from the Népoui operation to keep its Doniambo smelter operating at a low rate, a spokeswoman said.

OTHER METALS: LME aluminium slipped 0.8% to $2,031 a tonne, zinc rose 0.8% to $2,814, lead rose 0.8% to $2,048, and tin dropped 0.5% to $19,645.

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