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. “The Chinese data, on the surface, indicate the stimulus package, which includes fiscal and bank lending, has an effect in stimulating the economy,” said James Parsons, portfolio manager at London-based BlueCrest Capital Ltd., which manages about $12 billion. “The question is, how sustainable that is.” 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 $4,978 as of 11:27 a.m. Nickel added 3.7 percent to $14,455 a ton, the highest since Oct. 8. 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 May 21. The dollar weakness also encouraged traders and investors to buy commodities as a hedge against further weakness of the currency, Parsons said. 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. Further dollar weakness and more signs of the Chinese economic recovery will buoy metals as traders and investors, who had sold them to bet on a price decline, buy back the positions, Leon Westgate, an analyst at Standard Bank Plc in London, said today by phone. BHP, Anglo Mining companies also rallied today in London. BHP Billiton Ltd., the world’s largest, jumped almost 5 percent and Anglo American Plc climbed 6.5 percent. Oil, gold and platinum also gained. 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 $37, or 2.6 percent, to $1,477 a ton, tin increased $300, or 2.1 percent, to $14,600 and lead advanced $65, or 4.1 percent, to $1,635. Zinc was $34, or 2.2 percent, higher at $1,601.

Source