Categories:
Base Metals
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General Market Commentary
Topics:
General Base Metals
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General Market Commentary
Copper jumps above $7,000 to hit new 3-year high
Copper prices jumped to a fresh three-year high Monday, rallying on bullish Chinese economic data.
Copper was up 2.34% at $7,054 a metric ton in midmorning trade in London.
The industrial metal broke through the psychologically important $7,000-a-ton technical barrier early Monday in the wake of data that suggested that China's economy was defying expectations of a slowdown.
China's producer prices in September rose 6.9% compared with the same period a year ago, according to the government's statistics bureau. That pace was faster than a 6.3% increase in August and beat the 6.4% forecast by economists. Driving prices were steel and other metals, which have risen in response to infrastructure spending,
Meanwhile, the consumer-price index's growth eased to 1.6% in September, from a 1.8% increase in August, the statistics bureau said.
"The growth fears based on weaker data in August and September have now completely gone, and speculative buying has pushed copper that much further than the technical threshold," said Carsten Menke, a commodity analyst at Julius Baer.
Impressions of renewed trader optimism were backed up by positioning data, with the most active copper futures contract on the Shanghai Futures Exchange hitting its highest level in 4 1/2 years, according to Commerzbank in a morning note.
Those speculative purchases helped further boost prices, Commerzbank added.
The numbers also coincided with the implementation of government-mandated capacity cuts across a number of industries in China, and that was also influencing broader base metals prices, ING said in a note.