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Copper rallies on bets of strong Chinese demand-18th China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
3/2/2017 Copper exhibition -non-ferrous metals expo |
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The Age reported that copper prices rose to their highest in more than a week as manufacturing data from China showed potential for strong demand, reinforcing worries about shortages due to supply disruptions. Benchmark copper on the London Metal Exchange ended up 0.7 per cent at USD 6016 a tonne from an earlier $US6090, its highest since February 21.
Factory activity in China expanded faster than expected in February as domestic and export demand picked up, adding to signs that the global economy is gaining momentum even as fears grow of a surge in trade protectionism.
Commerzbank analyst Eugen Weinberg said that "Chinese data is definitely a reason to be bullish on industrial metals.¡± He said that "If the Fed goes for more rate hikes (than expected) this year, then it''s due to underlying economic dynamics proving to be more positive than expected, which is a good thing."
But prices were capped by a stronger US currency, which when it rises makes dollar-denominated commodities more expensive for non-US firms, potentially weakening demand.
The dollar hit its highest in seven weeks as comments from two influential Federal Reserve policymakers were interpreted to mean that US rates could rise at the March meeting.
However, supply disruptions in Indonesia and Chile are a positive for copper.
Freeport-McMoRan''s inability to export copper concentrate since mid-January and a strike at BHP Billiton''s Escondida mine in Chile the world''s largest last month pushed copper to 21-month highs of USD 6204 a tonne.
UBS analysts said in a note that "Potential mine supply disruptions are not the only factors supporting higher prices. The demand backdrop for copper should strengthen this year as well.¡±
"We expect global economic growth to accelerate, driven by firmer industrial production. With global economic activity improving, copper demand is likely to expand towards 3.7 per cent this year from 3 per cent last year.¡±
-18th China(Guangzhou)Int¡¯l
Non-Ferrous
Metal£¨Copper£©Exhibition
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