Copper rises to 2-year highs on China, dollar

LONDON — Copper prices hit their highest in more than two years on Tuesday, boosted by signs of robust demand from top consumer China, tight supplies, a weak dollar and a break of key technical levels.

Benchmark copper on the London Metal Exchange ended up 3.30% at $ 6,225 a ton, having earlier touched $6,234.50 a ton, its highest since May 2015. Gains accelerated after New York opened.

“China growth is looking stronger, it’s encouraging at a time when you would normally expect a lull,” said Cantor Fitzgerald analyst Asa Bridle. “We have a perfect combination of decent demand and tighter supplies.”

Traders say talk of a Chinese ban on scrap containing copper based on this notification may have helped trigger copper’s rally.

China’s gross domestic product was up 6.90% in the second quarter year on year, faster than the consensus 6.80% and the government’s 6.50% target.

The US currency weakened to a 13-month low against a basket of major currencies, making dollardenominated metals cheaper for holders of other currencies and potentially helping demand.

Disruptions to copper shipments from Canada and Chile have undermined expectations for rising global copper supplies in the second half of the year.

A break of $6,030, a Fibonacci retracement, and the Feb. high at $6,204 saw funds that trade using buy and sell levels from blackbox models jump on the uptrend, traders said.

Resistance is now seen around $ 6,400, an area of congestion from May 2015, but traders say copper is overbought and needs to consolidate before trying to tackle higher levels.

“Manufacturers are restocking after drawing down copper stocks,” a trader said.

“There has been a fair amount of short covering too… Momentum seems to be running out of steam and we’ve seen some producer selling.”

President Rodrigo R. Duterte said on Monday he wants all mineral resources extracted in the country to be processed domestically and, if possible, to stop exporting such commodities. The Philippines is the world’s top supplier of nickel ore, for which China is the biggest market. Worries about supplies pushed benchmark nickel up to $10,015 a ton, its highest since April 11. The price ended up 2.30% at $10,010 a ton.

Aluminum was up 0.90% at $1,930 a ton, zinc rose 1.70% to $2,836 a ton, lead added 2.60% to $2,318 a ton and tin gained 0.70% to $20,305 a ton.