Base metals post best rally in two years on US economic expansion
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Zinc for delivery in three months climbed 3.6 per cent to settle at $US1752 a metric ton at 5.51pm on the London Metal Exchange. Bloomberg
Investors who stayed bullish on industrial metals are finally being rewarded as renewed optimism for the demand outlook pushed prices to their biggest rally in more than two years.
In the US, economic growth last quarter exceeded all forecasts in a Bloomberg survey, while in China stocks rebounded to halt a five-day rout. The countries are the world's biggest metals consumers. Zinc surged the most since June 2012, copper climbed more than 4 per cent and aluminum and nickel advanced.
The Bloomberg Industrial Metals Subindex jumped as much as 4 per cent, the biggest intraday gain since May 2013. The gains are helping the measure to recover after tumbling 16 per cent over the past three months, the steepest loss since 2011. Prices also climbed on signs that miners will start cutting back output, helping to alleviate concerns about oversupply. Freeport-McMoRan shares posted a record gain as the largest publicly traded copper producer unveiled plans to reduce production.
"There's a chance that we've already seen the bottom in prices," Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. "It looks like China is going to make every effort that it can to help stabilise its stock market. Some bargain-hunters are coming and they're purchasing commodities across the board. The US GDP is great, and that's helping as well."
Zinc for delivery in three months climbed 3.6 per cent to settle at $US1752 a metric ton at 5.51pm on the London Metal Exchange. Prices rose as much as 4.4 per cent, the most since June 29, 2012.
"We're a little bit less worried about global growth concerns," Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. "We're rallying on the back of better demand sentiment."
On the Comex in New York, copper futures for December delivery advanced 4.2 per cent to settle at $US2.3285 a pound. On the LME, aluminum, nickel and lead rose, while tin fell.
Freeport lowered its annual copper-sales forecast by 150 million pounds in 2016 and 2017. Shares rose as much as 32 per cent, the biggest intraday advance in 20 years of trading.
The Bloomberg World Mining Index gained as much as 5.2 per cent, the most since June 2013.
Bloomberg
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