Industrial metals prices jumped overnight, with copper rising as much as 3 per cent as an easing of coronavirus lockdowns in many countries and hopes for a vaccine fuelled optimism among investors that also lifted stock markets and oil.
At 1610 GMT, benchmark copper on the London Metal Exchange (LME) was up 2.6 per cent at $US5,317.50 a tonne and headed for its biggest daily gain since mid-April.
Prices of the metal used in power and construction fell from around $US6,300 in January to a four-year low of $US4,371 in March as the coronavirus spread, but have recovered as China, the biggest consumer, reopens.
A flood of cheap money from central banks into financial markets was lifting all assets including copper, said Commerzbank analyst Eugen Weinberg.
“Momentum is still behind copper, so it can go on for some time, but current levels are already elevated,” he said.
He said a ballooning surplus would push prices back below $US5,000 a tonne before they recover to around $US5,600 by year-end.
Summer weather is enticing much of the world to emerge from coronavirus lockdowns, which should revive economic activity.
Stock markets and oil prices moved sharply higher, also boosted by encouraging early data from a potential coronavirus vaccine trial.
However, Japan and Thailand tumbled into recession, a German engineering association warned of a double-digit fall in exports, China’s commerce minister said global demand had slumped and the head of the IMF said economic recovery would be slower than initially expected.
US lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China.
China’s appetite for foreign copper has improved, however, with Yangshang import premiums at $US112.50 a tonne up from $US55 in February and the highest in a year and a half.
“Demand in April was good because the market caught up with Q1 delayed orders, but now it is slightly weaker,” CRU analyst He Tianyu said. Demand in China could increase slightly in the next few months, he said.
Freeport-McMoRan said it will operate its giant Grasberg copper-gold mine with a “skeletal team” after a rise in coronavirus infections in the area.
China Daye Non-Ferrous Metal Mining Ltd said its refined copper output came in more than 10 per cent below target in the first quarter.
LME zinc was up 2.9 per cent at $US2,018 a tonne as 17,500 tonnes of cancellations reduced on-warrant stocks in LME-registered warehouses to 72,200 tonnes, the lowest since April 7.
Mexico’s Industrias Penoles said it would suspend operations of its Francisco I. Madero mine, which produced 41,541 tons of zinc and 8,905 tons of lead last year.
LME aluminium was up 2.4 per cent at $US1,496.50 a tonne, nickel rose 3.3 per cent to $US12,250, lead gained 4 per cent to $US1,664 and tin was 2.2 per cent higher at $US15,295.