Copper prices hit two-year peaks on Monday as soaring steel and iron ore prices in China brightened the outlook for growth and industrial demand in the world's largest metals consumer. Chinese rebar steel futures surged as much as 7 percent to their highest in more than four years on expectations of reduced supply in the winter due to Beijing-imposed capacity curbs.
"It's a combination of (positive) sentiment around China that coincides with a realisation that the copper market balance has been on a knife edge for the last year. Disruptions on the supply side have left limited room for error," said Paul Gait, an analyst at Bernstein.
London Metal Exchange copper ended up 0.7 percent at $6,414 a tonne, having earlier jumped to $6,447.50, its highest since May 2015. China earlier this year ordered steel and aluminium producers in 28 cities to slash output during winter as it fights smog. Last week, the key steel producing area of Tangshan and other parts of Hebei province said they will implement the order.
Aluminium closed up 2.8 percent at $1,964 a tonne, its highest since late May, while in Shanghai, prices hit their highest since January 2013 on prospects for shutdowns in top producer China. Stainless steelmaking ingredient nickel ended up 1.5 percent at $10,400, chasing surging steel prices in China, though gains were capped by still high levels of inventory.
Also benefiting from the Chinese steel price surge was zinc, used mainly to galvanise steel. Prices for the metal closed 1.6 percent higher at $2,858, having earlier hit $2,890, their highest since March. Hedge funds and money managers boosted their net long position in COMEX copper to a record high in the week to August 1, US Commodity Futures Trading Commission data showed on Friday. Indonesia, the world's largest tin exporter, shipped out 6,205.87 tonnes of refined tin in July, data showed, a jump of 87 percent from the same month a year earlier. Tin closed up 0.4 percent at $20,600 a tonne, while lead ended flat at $2,361.