Copper prices hit an almost 30-month high on Tuesday with fresh buying triggered by optimism about COVID vaccines, expectations of robust demand in top consumer China and a weaker dollar.
Benchmark copper on the London Metal Exchange had gained 1.7% to $7,302 a tonne at 1139 GMT.
Prices of the metal used widely in the power and construction industries earlier touched $7,331 a tonne, the highest since June 2018 and a rise of nearly 70% since March when COVID lockdowns hit manufacturing activity.
“Positive information coming through on vaccines reduces some of uncertainty created by the virus,” said Richard Fowler, strategist at broker Simpson Spence Young.
“Requirements from China remain strong as seen in its copper imports and also supportive is the weaker dollar.”
VACCINES: The latest report came from AstraZeneca, which on Monday said its COVID-19 vaccine could be up to 90% effective, giving the world’s fight against the global pandemic a third new weapon that could be cheaper to make, easier to distribute and faster to scale-up than rivals.
IMPORTS: China’s copper imports rose year on year in October and set a new annual peak with two months to spare, underscoring the speed of the recovery from the coronavirus in the world’s top consumer of the metal.
ACTIVITY: China’s industrial production rose 6.9% in October from a year earlier, in line with September’s gain and faster than the 6.5% rise expected in a Reuters survey.
DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for holders of other currencies, which could boost demand and prices.
“There is a lot of speculative buying going on, it looks overbought. A correction or some consolidation is overdue,” a copper trader said.
STOCKS: Adding to bullish sentiment are falling stocks of copper in LME registered warehouses, which at 154,825 tonnes are down more than 15% since mid-October.
OTHER METALS: Aluminium was up 0.2% at $1,978 a tonne, zinc added 0.5% to $2,742, lead rose 0.4% to $2,018, tin advanced 0.5% to $18,735 and nickel gained 1% to $16,090.
(Reporting by Pratima Desai; Editing by Edmund Blair)