Copper rallied to the highest gain in close to two weeks as surging industrial output last month erased fears that demand will decline in China, the world’s largest market for the metal.
China manufacturing soared 8.8% in May from the previous year, up from 8.7% in April, data from the National Bureau of Statistics showed today in Beijing. Copper inventories monitored by the Shanghai Futures Exchange plunged 5.3% this week to 81,929 metric tons, a low that was last seen in December 2011.
“Much of the support in the copper market came from the Chinese industrial numbers. The Chinese numbers came in line with expectations, and it alleviated some of the concern in the market. It’s a leading indicator for demand for copper,” Tim Evans of Chicago-based Long Leaf Trading Group Inc told Bloomberg in a phone interview.
Copper contracts for July delivery added 0.5% to $3.0295 per pound as of 1:13 pm on New York’s Comex, the biggest rise since June 2. Prices plunged 0.7% this week.
But as Reuters report, copper hit a weekly loss for the third consecutive time following an investigation into metals financing in China.
Reports that emerged this week indicating that authorities are investigating use of consignments of metal as security to access financing in China have triggered concerns about trade in copper.
Concerns about fraudulent lending at some depots in Quingdao have made some lenders and merchants reduce credit for financing deals or move metal to more transparent warehousing companies.
It’s likley that investors will continue to track Chinese economic data closely to assess the status of the world’s leading consumer as its economy hasn’t had a very fine start to the year.
Blue-chip nickel added 0.4% at $18,070 per ton, after losing to a two-month low in the previous session. Prices have declined 4.2% this week.
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