China data drive copper to 4-1/2-month peak

LONDON — Copper prices hit four-and-a-half-month highs on Monday as better-than-expected economic data from top consumer China and a weak dollar helped reinforce expectations of strong demand.

Benchmark copper on the London Metal Exchange ended up 1.20% at $5,996 a ton from an earlier $6,022.50, its highest since March 2.

“There’s a bid across the complex on the Chinese data,” said Macquarie analyst Vivienne Lloyd. “The dollar is also helping.”

China’s economy grew by 6.90% in the second quarter from a year earlier, faster than expected. Industrial production rose 7.60% in June year on year, above the 6.50% expected and the fastest in three months.

“The manufacturing sector is heavily dominated by the private sector, which accounted for over 70% of China’s economic output,” HSBC analysts said in a note.

“The recovery of the private sector is the most notable and positive development since last year, and bodes well for both growth and debt sustainability.”

China accounts for nearly half of global copper consumption estimated at 23 million tons this year.

The US dollar hit a 10-month low against a basket of currencies, making dollar-denominated commodities cheaper for holders of other currencies and potentially boosting demand.

Copper support around $ 5,870, a Fibonacci level. A sustained break of strong resistance at $6,000 could trigger further buying towards $ 6,030, the March high. “If copper holds above $6,000, we’ll see momentum players jumping in,” a copper trader said.

A small premium for cash zinc over the three- month has seen metal put back on warrant in London Metal Exchange-registered warehouses. Metal available to the market is up at 37% from 25% last week.

Aluminum prices were capped by Chinese production, which jumped 7.40% year on year to 2.93 million tons in June, exceeding December’s record of 2.89 million tons. China accounts for more than half of global aluminum supplies, estimated at 60 million tons.

Expectations of lower aluminium supplies from top producer China over the coming months, due to shutdowns of illegal capacity, are expected to buoy prices. Capacity closures to improve air quality are also expected to help.

Among other industrial metals, aluminum slipped 0.40% to $ 1,919 a ton, zinc gained 1% to $ 2,815, lead ceded 0.80% to $2,296.50, tin climbed 0.60% to $19,925 and nickel added 0.20% at $9,600. —