Copper hits three-year high on solid China outlook
london — Copper prices rose on Monday to their highest level in three years and nickel touched a two-year high as strong Chinese economic growth boosted the outlook for demand from the world’s largest metals’ consumer.
Industrial metals mostly rose despite a nuclear test by North Korea that pushed down global stocks and boosted safe havens assets. “Copper continues to enjoy the tailwind from the outlook in China,” said Saxo Bank analyst Ole Hansen.
A recent strengthening of the Chinese yuan against the dollar was also helping metals to rally, said Hansen. A stronger yuan makes dollar-priced metals cheaper for Chinese investors.
Benchmark copper on the London Metal Exchange was up 1.1 per cent at $6,909 a tonne at 1026 GMT after touching $6,920.25, the highest since September 2014.
Prices have been supported by a surge in speculative momentum buying, with hedge funds and money managers raising their net long position in copper to a fresh record last week.
“We regard the copper price — and indeed the other metals prices — as overbought,” said analysts at Commerzbank. “Prices have become largely detached from the fundamental data ... the potential for and possible extent of a price correction are increasing every week.”
Fibonacci resistance kicks in at around $7,200 a tonne, when prices will have recouped half of the losses suffered during a 20112016 downtrend, said Hansen.
Headline stocks in LME-registered warehouses fell by 2,625 tonnes to 223,500 tonnes, near their lowest since early March, supporting prices.