LONDON: Copper leapt above $7,000 a tonne on Wednesday for the first time since June 2018, helped by hopes for US stimulus, strikes at mines in Chile, expectations of healthy demand in China and a strengthening yuan.
Benchmark copper on the London Metal Exchange (LME) was up 1.4% at $6,998.50 a tonne at 1602 GMT after earlier reaching $7,034.
The metal used in power and construction has risen 60% from a low in March as China, which consumes around half the world’s copper, rebounded from the coronavirus shock.
Adding to the bullish mood were expectations of bigger stimulus if Joe Biden wins the US presidency, and more Chinese demand after a meeting of China’s leaders next week to discuss a five-year development plan, said ING analyst Wenyu Yao.
“In the short term, the market could remain well supported,” she said. The White House and congressional Democrats kept up negotiations on a fresh coronavirus relief bill despite opposition from the Republican-controlled Senate.
The dollar fell to its lowest in seven weeks while the yuan rose to its strongest since July 2018, taking its gains against the dollar since May to 7% and making metals cheaper for Chinese buyers.
Global stocks were mixed.
China’s fiscal revenues grew 4.7% in the third quarter from a year earlier.
The prospect of China buying copper for its stockpiles is filtering through the market.
China’s imports are soaking up the world’s excess copper, writes Andy Home.
Chile’s Candelaria copper mine suspended operations from Tuesday after unions called for strikes. Workers at Codelco took to the streets on Monday to reject layoffs. Chilean miner Antofagasta said full-year copper output would be at the lower end of its original guidance of 725,000-755,000 tonnes. The global lead and zinc markets will be oversupplied in 2021, the International Lead and Zinc Study Group said.
LME cash copper is expected to average $6,800 a tonne in 2021, aluminium $1,775 a tonne, nickel $15,157 a tonne and zinc $2,350 a tonne, a Reuters poll found.
On Wednesday, LME aluminium was up 0.7% at $1,846.50 a tonne, zinc rose 1.6% to $2,569.50, lead added 2.2% to $1,805 and tin was 0.3% higher at $18,725. Nickel bucked the trend, falling 0.9% to $15,885.
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