London copper, nickel jump on supply concerns

MELBOURNE — London copper advanced on Monday on an improving demand outlook and concerns about supply constraints next year, while Shanghai nickel extended gains after the Philippines said it would close more mines on environmental grounds.

Sentiment towards industrial metals has picked up in the past month as the United States’ and China’s economy both appear to have found a firmer footing.

Growth in China’s services sector accelerated to a 16-month high in November, a private survey showed on Monday while the US unemployment rate fell to a nine-year low of 4.60% in November, data showed on Friday.

“I think we enter 2017 with both the demand and supply story good for copper,” said analyst Dan Morgan at UBS in Sydney.

“In China, grid spending is still strong and appliances data has also been good for several months. Next year we are looking for flat supply growth. That’s a big deal after 4% growth this year,” he added.

China’s construction sector is a key driver of copper demand, both for cabling and for appliances such as air- conditioners and refrigerators for new homes.

UBS sees copper averaging around $ 3 per pound ($ 6,614 a ton) next year.

Three- month copper on the London Metal Exchange (LME) rose 1.30% to $5,836 a ton by 0252 GMT, after edging down 0.50% in the previous session. Prices hit $6,045.50 a week ago which was the highest since June 2015.

Shanghai Futures Exchange ( SHFE) copper reversed early losses to climb 1.30% to 47,280 yuan ($6,863) a ton.

Among other metals, nickel rose on prospects of falling supply from the Philippines. SHFE nickel climbed 3.30% while LME nickel climbed 0.60% to $11,545 a ton but remained below November peaks above $ 12,000 a ton. The Philippines will suspend more mines in a fight against environmental degradation, the minister in charge of mining said, a move that could put future supply from the world’s top exporter at risk and lift nickel prices.

Stockpiles of ore for China’s vast stainless steel- making industry have been falling. Nickel stocks at Chinese ports have turned sharply lower in the past month, declining by some 20,000 tons to around 1.24 million tons, latest data showed, the lowest since July. —