The Fed said yesterday it will continue buying debt to stoke U.S. growth. China said its purchasing managers’ index for July was 50.3, above the level of 50 that separates growth and contraction and beating the estimate of 49.8 in a Bloomberg survey of economists. Copper prices were down 15 percent this year through yesterday on concern that demand would slow, so investors are now buying copper to close out bearish bets, according to Michael Turek at Newedge Group SA in New York.
“Short-covering accelerated as the Fed suggested that the U.S. economy is not yet ready to walk, much less run, without the crutch of stimulus,” Turek, a senior director,said in an e-mail. “Last night’s Chinese manufacturing data improved, too.”
Copper futures for delivery in September advanced 1.5 percent to $3.166 a pound at 1:09 p.m. on the Comex in New York, leaving prices up 4.1 percent over two days, the most since May 6.
A separate gauge of Chinese manufacturing from HSBC Holdings Plc and Markit Economics last week fell to 47.7, an 11-month low.
World copper supply, bolstered by rising mine output, may outstrip demand in 2014 for a second year and touch a five-year high, according to Pan Pacific Copper Co., Japan’s top producer.
Stockpiles monitored by the London Metal Exchange dropped for a 12th session, the longest streak since May 2012, to 610,725 metric tons, daily exchange figures showed. Inventories in Malaysia’s Johor, the biggest repository in the LME’s global network, slid 15 percent last month. Orders to take copper from warehouses fell 0.7 percent to 312,575 tons today.
On the LME, copper for delivery in three months rose 1.7 percent to $6,999 a metric ton ($3.17 a pound).
Aluminum, lead, nickel, tin and zinc were higher in London.
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