London copper struck its highest in 10 days on Friday, poised for a weekly rise, as traders bet on improving demand from China and a potential fall in mine output later in the year.
Falling oil prices are feeding through to boost global economic growth, evident in rising inflation in Asia in particular, said Jonathan Barratt, chief investment officer at Sydney’s Ayer’s Alliance.
“Plus, seasonally (in China) we’re seeing consumption ... If the States are showing good gains, then the other economies will follow because they’re following the same stimulus measures,’’ he said.
Among major emerging economies in February, China’s consumer inflation picked up to 1.4 per cent, while in Brazil, inflation hit the highest in a decade at 7.7 per cent, and India’s consumer inflation edged up for the third straight month.
China is the world’s top copper user, accounting for around 40 per cent of refined demand.
Three-month copper on the London Metal Exchange climbed by 0.6 per cent to $5,881 a tonne by 0237 GMT, adding to 2 per cent gains from the prior session. Prices earlier climbed to $5,900, the highest since March 3.
The most-traded May copper contract on the Shanghai Futures Exchange rallied 1.9 per cent to 42,880 yuan ($6,852) a tonne, soothed by brighter lending figures out of China that pushed shorts to cover.
“That new loan data spooked the Chinese shorts a little,’’ said a trader in Singapore.
Chinese banks extended 1.02 trillion yuan ($162.87 billion) worth of new loans in February, well above market expectations, data showed this week.
The higher prices slowed buying by Chinese copper consumers, though, with the local physical premiums dropping back to a discount against the front month SHFE futures contract, having traded above it the day before.
Lead, aluminium
Across other metals, for March, LME lead is so far the top performer for the month, up 5.2 percent amid signs of improving demand, while LME tin has suffered the biggest losses due to limp demand. Tin is down 4 percent so far.
Reflecting pressure on the global aluminium market, Venezuela’s state-controlled smelter Venalum, the largest primary aluminium smelter in Latin America, will no longer be able to meet purity standards due to its deteriorating financial situation, according to a company document seen by Reuters.
The dollar took a pause from recent strength, soothing pressure on commodities. US retail sales unexpectedly fell in February as harsh weather kept consumers at bay, tempering the outlook for first-quarter growth and a June interest rate hike by the Federal Reserve.