Copper prices hovered near two-year highs on Tuesday after strong manufacturing data in China, the biggest consumer, boosted confidence in the demand outlook.
A positive mood rippled through markets, lifting global equities, while the yuan jumped to its strongest in 16 months against the dollar, helping metals by making them cheaper for Chinese buyers.
Benchmark copper on the London Metal Exchange (LME) was down 0.2% at $6,783 a tonne at 0944 GMT but within striking distance of a 26-month high of $6,830 reached on Sept. 1.
“The Chinese data show there’s still a very positive backdrop for industrial metals and copper in particular,” said Capital Economics analyst Kieran Clancy.
He said traders had already priced in a strong rebound in Chinese demand, with copper up more than 50% from a low in March, but that prices would continue to rise at a slower pace.
FACTORIES: China’s industrial output accelerated the most in eight months in August and retail sales grew, suggesting the economic recovery is gathering pace.
US industrial production data is due at 1315 GMT.
VACCINE: A Chinese official said coronavirus vaccines being developed in China may be ready for use by the general public as early as November, boosting confidence in the economic rebound.
INVENTORIES: On warrant copper stocks in LME-registered warehouses rose to a three-week high of 45,950 tonnes but have fallen from around 250,000 tonnes in May.
SPREAD: In a sign of tight nearby supply, cash copper on the LME traded at an $18.50 premium to three-month metal.
ALUMINIUM: China’s aluminium production in August rose 2.3% from a month earlier, setting a record high for a second month.
OTHER METALS: LME aluminium was up 0.4% at $1,807 a tonne, zinc rose 1.5% to $2,518, nickel slipped 0.2% to $15,240, lead gained 0.4% to $1,934.50 and tin was down 0.3% at $18,100.
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