Copper at three-year peak near $7,000 on resilient global factory growth

MELBOURNE — London copper hit its highest in three years in early Asian trading on Monday as investment flowed into industrial metals amid surprisingly robust global factory growth.

Factories across Asia and Europe cranked up production last month as global demand remained strong, confounding expectations growth may have peaked.

“Chinese demand has been good. Chinese demand has been more than what the market generally expected but it is not gunsblazing amazing, which means that supply is playing a key role here,” said Vivek Dhar at Commonwealth Bank Australia in Melbourne.

“Yes, there is latent capacity that could be brought on line but no one is doing it so I think we are likely to have prices at least supported around current levels into the fourth quarter. I think we will get more clarity after China’s Congress in mid- October.”

London Metal Exchange (LME) copper was up 0.80% at $ 6,890 a ton, as of 0524 GMT, extending a 0.70% advance from the previous session. Earlier in the session, prices struck $6,915 a ton, their highest since Sept. 2014. Prices are now on track for their biggest annual advance since 2010, up 25%.

Shanghai Futures Exchange copper rose as much as 0.80% to 53,140 yuan ($8,115) a ton.

“Copper is dead,” said a physical trader in Singapore.

“Even for my customers who might want to buy 500-1000 tons, they are buying in lots of two, hoping that prices will go down again. They know prices could go up, maybe to $ 7200, but are waiting for prices to hit the $6600 mark.”

LME nickel was the biggest gainer for the session, striking its highest since June 2015 at $ 12,380 a ton, before trimming gains to $12,230, still up 1.60%, as steel and its inputs stretched a rally fueled by expectations that China will close capacity over winter to clear its smog-choked skies.

US job growth slowed more than expected in August after two straight months of hefty increases, but the pace of gains should be more than enough for the Federal Reserve to announce a plan to start trimming a massive bond portfolio accumulated as it sought to bolster the economy. —