London copper climbs with oil on reflation trade

MELBOURNE — London copper rose on Monday, rebounding from a weekly decline last week, and other metals also gained as investors poured into the sector on the prospects for higher inflation in line with rising oil prices next year.

The likelihood of rising US interest rates, better than expected China consumption this year and smaller growth in mine supply for 2017 all played a part in improving the consensus views for copper’s outlook, said analyst Dan Hynes at ANZ in Sydney. “Looking at copper technicals, it’s looking overbought, but when you place it against the metals complex, it looks like it can go higher.”

Three- month copper on the London Metal Exchange (LME) climbed 2% to $ 5,530 a ton by 0328 GMT, paring losses from the previous session.

Shanghai Futures Exchange copper rallied 1.5% to 44,840 yuan ($6,501) a ton.

The physical market has supported the steep move in copper price, with premiums for metal in Shanghai staying firm at $95 a ton, up from $70 a month ago.

However, premiums for metal to be shipped to Shanghai fell by $15 to $80 a ton last week, suggesting some traders have become reluctant to source metal from overseas.

Oil prices rose around 1% on Monday as the Organization of the Petroleum Exporting Countries moved closer to an output cut to rein in oversupply that has kept prices low for over two years.

Chinese President Xi Jinping pledged to open the economy further on Saturday as leaders of Asia-Pacific countries sought new free-trade options following Donald J. Trump’s election to US president on promises to scrap or renegotiate trade deals. Clues on future US policy under Mr. Trump rather than economic data will likely dominate minds and markets in the week ahead given a US interest rate hike in December is now a near-certainty.

Reflecting increased appetite from investors, hedge funds and money managers raised their netlong position in COMEX copper futures and options in the week to Nov. 15 to a record for the second straight week, US Commodity Futures Trading Commission data showed on Friday.

Among other metals, LME nickel rebounded 2.7% to $11,140 a ton, LME zinc and lead were up around 2.1%. —