Copper Climbs Most in a Week on Speculation China's Metal Demand to Climb
Copper rose the most in a week on speculation that demand may grow after China, the world’s biggest metals user, signaled an end to the yuan’s fixed rate against the dollar.
Nickel, aluminum, zinc, lead and tin gained on the London Metal Exchange after the People’s Bank of China indicated it will abandon the peg of 6.83 yuan to the dollar. A weaker U.S. currency makes dollar-priced raw materials cheaper for importers. Copper futures are up 31 percent in the past year.
“A stronger yuan delivers an increase in purchasing power for Chinese consumers, leading to stronger imports, which might include base metals, primarily copper and nickel,” said Michael Jansen, an analyst at JPMorgan Securities Ltd. in London.
Copper futures for September delivery rose 5.8 cents, or 2 percent, to $2.9595 a pound on the Comex in New York, the biggest gain since June 14. On the LME, copper for delivery in three months climbed $169, or 2.6 percent, to $6,604 a metric ton, also the most since June 14.
Chinese copper imports “remained historically strong” amid “a strong set of Chinese trade data for May,” Barclays Capital said today in a report.
Daniel Major, an analyst at RBS Global Banking & Markets in London, downplayed a stronger yuan’s potential effect on imports. The bank is forecasting a 3 percent rise in the yuan against the dollar by year-end, he said.
“I don’t think a 3 percent appreciation of any currency in the longer term is going to be the main driver of prices,” Major said.
To contact the reporters on the story: Anna Stablum in London at astablum@bloomberg.net; Yi Tian in New York at mshankar@bloomberg.net.
Rate this Page