The price of copper advanced towards an 11-week high in London, buoyed by optimism that surging stocks market on a global scale signal a favorable forecast for economic growth. Aluminum hit a 4-week peak.
The Standard & Poor’s 500 gauge stocks were little changed on Wednesday, after hitting a record peak yesterday. The volume of durable goods ordered in the US in April saw a surprise jump for the third month in a row, while Chinese manufacturing profits surged. The countries are world’s largest markets for copper.
“Traders are optimistic about growth prospects. The recent rise in copper prices is clearly a spillover effect of the equity markets,” analyst Naeem Aslam of Ava Capital Markets Ltd told Bloomberg by email.
Three-month delivery copper added 0.1% to $6,940.75 per metric ton or $3.15 per pound as of 5:04 pm, local time on the London Metal Exchange. The price had earlier hit $6,970, a high not seen since March 7.
The per pound price of July-delivery copper futures plunged 0.1% to $3.1755.
Stockpiles tracked by the LME descended 3.8% on Wednesday to 169,825 tons, the deepest plunge in more than six years. Inventories have added 54% in 2014.
Spot copper exchanged at a $94-per-ton premium to the three-month future of the LME, a gap not registered since two years ago. Wu Yuneng, vice president of Jiangxi Copper Co., the largest copper producer in China, said today that the margin is likely to expand to $100 in the wake of dwindling inventories.
According to Business Standard, analysts point to speculation that the Chinese government will move to stock the country’s economy, the world’s biggest buyer of copper as reason for price hikes.
In London, aluminum for three-month settlement advanced 0.6% to $1,840 per ton, after touching $1,848, a high that was last seen in April 28. LME inventories have hit the lowest since June.
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