Gains based on rise in U.S. infrastructure spending after Trump triumph and optimism over China demand.
Copper rose to a fresh one-year high on Wednesday, boosted by bets on a rise in infrastructure spending and continued optimism over China demand.
Copper for December delivery settled up 2.9% at $2.4480 a pound on the Comex division of the New York Mercantile Exchange, its biggest one-day gain in over a year. Wednesday marked the 13th consecutive session of gains for copper, the longest streak in at least 28 years.
The metal has surged to its highest price since September 2015 over the past few weeks thanks to an upbeat outlook for China. The election of Donald Trump as U.S. president spurred further gains on Wednesday, as investors bet that demand would pick up with a focus on infrastructure.
“This is positive for U.S. growth to start with,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets, who noted that Mr. Trump has pledged to invest heavily in infrastructure spending and lower taxes, which could help demand for copper, a key building material. “I think that’s reflected in the stronger copper prices.”
Copper is expected to benefit from stabilizing economic health in China, building and construction growth, and a boost in power infrastructure, according to a Citi note on Wednesday. Positive economic data from China has helped lift copper prices in a broad base metals rally as the country makes up 45% of global demand.
Still, some analysts expressed concerns about the size of the bump, as copper’s rally has looked vulnerable to a change in market sentiment.
“We find this price response rather excessive, and not entirely understandable,” said Commerzbank AG. The German bank said the gains could also be feeding on expectations that China won’t be able to export as much material.
“Given there isn’t really a fundamental change [to copper demand], I’m thinking this is a bit of a false dawn,” said Robin Bhar, a commodities analyst at Société Générale in London.
Protectionist trade strategies that Mr. Trump has promoted could also hurt trade with China, the world’s top copper consumer, in the long term, and the details of those policies were unclear.
The London Metal Exchange’s three-month copper contract closed up 3.4% at $5,413.00 a metric ton.
Aluminum closed up 1.2% at $1,753.00 a ton, zinc closed up 0.5% at $2,490.00 a ton, nickel closed up 2.8% at $11,575.00 a ton and lead closed up 0.8% at $2,141.00 a ton. Tin bucked the trend, closing down 1.3% at $21,275.00 a ton.
By Katherine Dunn & Stephanie Yang