Copper gained as faster-than-expected manufacturing growth in China and improving U.S. consumer confidence boosted the global economic outlook. The London Metal Exchange cash premium rose to the highest level in two years.
The metal for three-month delivery in London gained as much as 0.9 percent to $8,432.50 a metric ton before trading at $8,415 a ton at 3:10 p.m. Shanghai time. Other base metals traded on the exchange also advanced.
“The latest PMI figures indicated the economy is still growing at a healthy rate,” Peng Qiang, an analyst at Cofco Futures Co., said by phone from Beijing. “The tightening is aimed at controlling inflation, not bringing down economic growth. There is a subtle difference.”
China’s Purchasing Managers’ Index in November rose to 55.2, the fastest pace in seven months, from 54.7 in October, the China Federation of Logistics & Purchasing said on its website today. The result was more than the 54.8 median forecast of 14 economists surveyed by Bloomberg News.
The LME copper premium for immediate-delivery climbed to $60 a ton over the benchmark three-month contract yesterday, the highest level since October 2008. An unidentified company held between 50 percent and 79 percent of LME copper stockpiles from Nov. 22 through at least Nov. 26, the latest exchange data show.
“It looks like a squeeze to me,” Lu Chenghong, an analyst at Jiger Capital Management Ltd., said by phone from Shanghai, referring to a situation in which a single investor may be able to influence prices by holding a dominant position. “As the month progresses, the situation may change,” Lu said.
Copper for March delivery on the Shanghai Futures Exchange increased 1.6 percent to close at 63,670 yuan ($9,554) a ton. The metal traded on Changjiang nonferrous metals physical market was quoted at 62,550 to 62,700 yuan a ton today, or a discount of 150 to 300 yuan to the front-month Shanghai futures contract.
“The physical market in China isn’t really tight,” Peng said. “In fact, it’s a bit weak as demand in winter traditionally isn’t good.”
Another PMI released by HSBC Holdings Plc today showed manufacturing in the world’s biggest metals user rose to the highest level in eight months to 55.3 in November, from 54.8 the previous month, indicating the economy is keeping momentum amid recent increases in interest rates and required reserve ratios.
In the U.S., consumer confidence rose in November to the highest level in five months, exceeding the median forecast in a Bloomberg News survey, while Institute for Supply Management-Chicago Inc. said its business activity gauge advanced to the highest level since April.
In Chile, the workers’ union at Anglo American Plc and Xstrata Plc’s Collahuasi copper mine, the world’s fourth-biggest, had a day of “difficult” negotiations with the company and was still far from reaching an agreement over wages to end a 26-day strike, a union official said yesterday. He declined to be named, saying he is not an authorized spokesman.
Aluminum in London gained 0.7 percent to $2,291.50 a ton, zinc increased 1.8 percent to $2,149 a ton, and lead climbed 1.8 percent to $2,270 a ton. Nickel rose 0.5 percent to $23,175 a ton and tin advanced 1.3 percent to $24,800 a ton.