Copper claws higher on hopes for wave of U.S. spending

LONDON: Copper prices rebounded on Friday as investors bet that U.S spending plans on infrastructure would fuel shortages, shrugging aside worries about weak Chinese demand.

Three-month copper on the London Metal Exchange had gained 0.6pc to $10,283.50 a tonne by 1600 GMT, erasing losses seen in the morning and early afternoon.

Copper has surged by 31pc so far this year and touched a record peak of $10,747.50 on May 10.

"On one hand, we have downside pressure on the market from China, but on the other hand, there's a fixation by the market that the new Biden spending plan will be very big," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.

Stock markets gunned for record highs on Friday ahead of the White House presenting President Joe Biden's budget envisaging trillions of dollars in spending on infrastructure, education and other initiatives.

"The prospect of having another acceleration of consumption is pushing the market to think that the copper balance will turn into a much bigger deficit than forecast," Torlizzi added.

He expected copper prices to correct lower during the summer and targeted $8,000 as an attractive level to re-enter the market.

Copper is often considered a bellwether of the global economy due to its wide industrial uses, including in infrastructure projects.

The Yangshan copper premium dropped to $35.50 a tonne, its lowest since February 2016, indicating weakening demand for imported metal into China.

Democratic Republic of Congo has authorised exports of copper and cobalt concentrate for mining companies that hold waivers, customs documents showed.

Bottlenecks at LME registered warehouses in Malaysia owned by metals storage firm ISTIM UK are adding to the difficulties aluminium consumers in the United States and Europe face in getting the metal they need.

LME tin hit its highest since May 2011, climbing as high as $30,960 a tonne, after earthquakes following a volcanic eruption in Congo disrupted exports of tin concentrate. It later pared gains to $30,900, up 3.3pc.

LME aluminium rose 0.7pc to $2,499 a tonne, zinc added 0.3pc to $3,068.50, lead dipped 0.1pc to $2,200 and nickel gained 1.3pc to $18,125.