LONDON — Copper rose more than 3 per cent on Monday to hit the psychological $5,000 (U.S.) a tonne and its highest level since mid-October, as Chinese data and a weak dollar drove industrial metals to new multi-month highs.
Lending support to the view that the global economic slowdown may be bottoming out, China's purchasing managers' index for May marked the third month of expansion of activity in manufacturing, the China Federation of Logistics and Purchasing said. The figure was down slightly from 53.5 in April but well off the November's record low of 38.8. By 0943 GMT, copper for three month delivery on the London Metal Exchange rose to $4,975 a tonne from $4,830 at the close on Friday and compared with a session high at $5,014.75.
Battery material lead hit its highest level since Oct. 14 at $1,642.50 a tonne versus $1,570 but was last at $1,625.
“The market continues to buy the recovery story, as economic data suggests that the worst is behind us,” said David Thurtell, an analyst at Citigroup. “Investment money continues to pour into the complex.”
“With most of the metals hitting new highs for the year, the technical and momentum traders will start to pile in.”
In addition to China, which is one of the world's top industrial metal producers and consumers, investors will eye U.S. ISM and construction numbers from 1400 GMT.
Copper prices have risen about 60 per cent this year and dealers are looking for the rally to continue, at least in the short term, as rising European equities and a fall in the dollar sharpen appetite for riskier investments.
A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.
A rise in cancelled warrants – material earmarked for delivery – has boosted sentiment in copper, which is used in power and construction. Analysts say Chinese stockpiling is behind the movements but there is evidence the stock drawdowns may now be running out of steam.
On Friday, cancelled warrants were 36,700 tonnes compared with 38,825 tonnes the session before, while LME inventories dipped 300 tonnes to 311,975 tonnes.
Aluminum rose 2.9 per cent to a high of $1,482 but was last at $1,475 from $1,440. The metal used in transport and packaging has come under pressure in recent weeks on news of falling car sales data from auto makers.
Giving some hope to the beleaguered industry, General Motors Corp will file for bankruptcy later, forcing the 100-year-old automaker into a new and uncertain era of government ownership.
Aluminum cancelled warrants were 65,900 tonnes on May 29 compared with 52,900 tonnes on May 28. Total LME aluminum stocks rose 3,575 tonnes to a new record above 4.2 million tonnes.
“You have a continuation of Friday's strength mainly on the back of a weaker dollar...and you've got the Chinese data as well,” said Leon Westgate, an analyst at Standard Bank.
He added that the news from the U.S. auto industry was helping boost aluminium sentiment but the interest rate decision and comments from the European Central Bank later this week, would offer greater economic clues.
Steel making ingredient nickel hit $14,395, its highest since Oct. 8, from $13,950 but was last at $14,325.
Zinc hit a two-week high and was last at $1,601 a tonne from $1,555 and tin edged up to $14,600 from $14,200 – its highest level since mid-November.
Worries about lead and tin supplies has dogged both markets in recent weeks due to a dominant position controlling more than 40 per cent of cash warrants on LME stocks.
(20min delay)