Copper holds near 2-year high on China, dollar support

LONDON — Copper prices held near two-year highs on Tuesday, supported by expectations of stronger demand from top consumer China, where a government-led infrastructure push has led to robust activity in the construction sector.

Benchmark copper on the London Metal Exchange (LME) closed down 0.40% at $6,345 a ton. The metal widely used in power and construction hit $ 6,430 on Monday, its highest since May 2015.

“China data shows things humming along in manufacturing and construction. That’s the positive,” a copper trader said.

“The weak dollar also makes things easier for base metals, though there is some profit taking going on.”

The official manufacturing purchasing managers’ index (PMI) showed a 12th straight month of expansion, while a private PMI survey showed manufacturing growth quickened in July.

Euro zone growth remained robust in the second quarter, while factory output grew strongly in July.

An index of US factory activity fell from July’s near three-year high.

The dollar index near 14- month lows makes industrial metals denominated in the US currency cheaper for non-US firms, which could boost demand.

News that China may ban imports of some scrap metal from the end of 2018 started copper’s rally from below $ 6,000 last week. China is the world’s largest importer of scrap.

“The market was primed for the upside and scrap happened to be a reasonable cover story,” said Macquarie analyst Vivienne Lloyd. “Most of the preparation of this scrap type is likely to simply shift offshore from south China to other developing Asia, and we note the Philippines, Thailand and Malaysia have recently seen increases to both volumes of scrap flow to China and implied copper content ( by value).”

Three-month tin closed down 0.60% at $20,525 a ton, but close to the $20,905 a ton hit last week, its highest since the middle of January on worries about supplies from top producer China.

LME nickel finished 0.80% higher at $ 10,290 a ton, aluminum ended down 0.60% at $1,907, zinc closed down 0.50% at $2,780, while lead finished 0.20% higher at $2,338 a ton. —