Base Metals Are Back in a Bull Market
Ranjeetha Pakiam David Stringer
david_stringer
October 3, 2016 — 4:43 AM CEST Updated on October 3, 2016 — 6:49 AM CEST
Share on FacebookShare on Twitter
Don't Miss Out — Follow Bloomberg On
Facebook Twitter Instagram YouTube
China data ‘undeniably beneficial’ for metals: CME’s Norland
LME Index has advanced to its highest in more than a year
Share on Facebook
Share on Twitter
Copper advanced as industrial metals held gains that have pushed them into a bull market amid signs of stabilization in China’s economy.
The metal used in pipes and wires rose as much as 0.3 percent on the London Metal Exchange to $4,880 a metric ton, and was at $4,872.50 a ton at 3:26 p.m. in Sydney. Tin advanced as much as 0.6 percent to extend its best quarterly performance since 2013. Aluminum and lead also gained while zinc and nickel declined.
The LME Index, tracking six contracts, is at its highest in more than a year and moved into a bull market last week as sentiment improves following OPEC’s agreement to cut oil output, which drove up oil prices and increased production costs for metals. China’s manufacturing purchasing managers index, an official factory gauge, stayed at the highest level in almost two years for a second month and services increased, according to data released Saturday by the National Bureau of Statistics. Markets in China are closed this week.
“The PMI numbers were undeniably beneficial for metals,” and the entire industrial sector is showing renewed growth, Erik Norland, executive director and senior economist at CME Group Inc., said Monday in an interview in Singapore. “There’s been a lot of talk about how it’s one of the strongest numbers that we’ve seen out of China in the past two years.”
Copper demand will exceed supply by 52,000 tons in 2017 after a surplus of 110,000 tons this year, Japan’s biggest producer Pan Pacific Copper Co. said Monday in a presentation in Tokyo. Prices will climb 46 percent through 2020 as the global market swings to a shortage, it said.
Nickel retreated as much as 0.6 percent after it advanced Friday by the most in more than a week. Output of the metal in the Philippines, which accounts for about a fifth of global production, will tumble 18 percent this year amid the nation’s audit of mining operations, BMI Research said Monday in a note.
The audit raises the chances of prices rallying by about a quarter through 2017, according to UBS Group AG’s Daniel Morgan in an interview Friday.