Copper pushes base metals up
Copper futures in Shanghai rose to the highest in more than a month on speculation that demand for the metal will increase as the economy recovers and some investors boost holdings to hedge against a jump in inflation.
The rally in copper led other base metals higher, as improved corporate earnings helped whet investors' risk appetite for commodities and equities.
Copper for October delivery on the Shanghai Futures Exchange gained as much as five per cent compared with the previous settlement to 41,520 yuan (Dh22,320) a metric tonne, the highest since June 12.
Three-month copper on the London Metal Exchange (MCU3) rose $85 (Dh312) to $5,130 a tonne, after touching a two-week top of $5,150 earlier.
The premium in LME cash copper over the three-month price widened to $13/$17, the widest since mid-October, after flipping into backwardation for the first time since May at the start of the week. The backwardation reflects the continued decline in LME copper stocks over the past months, traders said, with inventory of the metal in London easing another 325 tonnes to 256,900 tonnes on Tuesday, less than half their February peak.
"There's some risk appetite and its spilling over into the base metals market," said analyst Yingxi Yu at Barclays Capital. "But I do not think any real fundamental changes have occurred in the short term."
China's economy may have expanded 7.8 per cent in the second quarter as the record lending and surging investment drove a rebound from the weakest growth in almost a decade.
"Investments are flowing into the copper market on expectation that the economy will recover," said Zhu Bin, head of research at Nanhua Futures. That would lift demand for raw materials, he added.
Aluminium added 0.6 per cent to $1,615 a tonne, zinc gained 2.1 per cent to $1,528 a tonne and lead climbed 2.1 per cent to $1,628 a tonne. Nickel jumped 3.2 per cent to $16,070 a tonne and tin climbed 2.1 per cent to $13,200.
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