BLBG: Copper Gains to $5,000 in London on Dollar, China Manufacturing
Copper rose to $5,000 a metric ton for the first time since October in London as the dollar weakened and China’s manufacturing expanded for a third month. Nickel climbed to almost an eight-month high.
The official Purchasing Managers’ Index in China, the top consumer of all metals, was at 53.1 in May, the Federation of Logistics and Purchasing said today in Beijing. A reading above 50 indicates an expansion. The Dollar Index dropped to its lowest level this year, making commodities traded in the U.S. currency cheaper to holders of other monies.
“We have strong Chinese data, a weak dollar and an expectation that the dollar will continue to weaken,” Leon Westgate, an analyst at Standard Bank Plc in London, said today by phone. The longer these factors continue, the more likely that traders and investors who had sold metals to bet on a price decline will buy back the positions, he said.
Copper for delivery in three months gained as much as $184.75, or 3.8 percent, to $5,014.75 a ton, the highest intraday price since Oct. 15. The contract traded at $4,991 as of 9:36 a.m. Nickel added 3 percent to $14,360 a ton, the highest since Oct. 3.
The London Metal Exchange index of six industrial metals has advanced 31 percent this year, rebounding from this decade’s steepest plunge in 2008, as signs of recovery in China indicate renewed appetite for copper, aluminum and raw materials.
Roads, Homes, Buildings
By the end of April, China had built 20,000 kilometers (12,430 miles) of rural roads, 214,000 low-rent homes, 445 kilometers of highway, and 100,000 square meters (1.08 million square feet) of airport buildings under the nation’s 4 trillion yuan ($586 billion) stimulus plan, the National Development and Reform Commission said on May 21.
Copper stockpiles monitored by the LME dropped 300 tons, or 0.1 percent, to 311,975 tons, according to today’s exchange data. LME-registered warehouses in Europe rose a net 1,225 tons, the first increase since May 6.
Hedge-fund managers and other large speculators reduced their net-short position, or a bet on price drop, by 6 percent in New York copper futures in the week ended May 26, according to U.S. Commodity Futures Trading Commission data.
RAB Special Situations Co. Ltd., the hedge fund managed by Philip Richards, said this year’s rally in copper and other industrial metals is driven by investment flows and China’s state stockpiling agency rather than demand.
“The manager is skeptical as to the sustainability of this rally as the strength does not appear to be supported by a broad-based recovery in industrial demand,” RAB said May 29. “Distortionary factors remain a major force in this market.”
Among other metals, aluminum rose $29, or 2 percent, to $1,469 a ton, tin increased $325, or 2.3 percent, to $14,625 and lead advanced $52, or 3.3 percent, to $1,622. Zinc was $33, or 2.1 percent, higher at $1,600.
