Base Metals Are Back in a Bull Market

  • Mining companies undergoing a renaissance: Investec’s Wrathall
  • Data shows China’s factory gauge at highest in almost 2 years

London Metal Exchange Index Enters Bull Market

Mining shares climbed to the highest in 15 months as Chinese factory data added to signs of an improving economy in the top consumer of raw materials. Producers are set to benefit from increasing demand that has already pushed prices for industrial metals into a bull market.

Reports from China showed a gauge of manufacturing held near a two-year high for a second month and services increased. The London Metal Exchange Index, tracking six metals contracts, is near its highest in more than a year and moved into a bull market last week.

The FTSE 350 Mining Index of industry stocks in London climbed as much as 2 percent to reach the highest since June 2015, led by Kaz Minerals Plc and Vedanta Resources Plc.

"The miners have had a total renaissance because of this uptick in metals and in iron ore and in coal," Jeremy Wrathall, head of global natural resources at Investec Plc, said in an interview with Bloomberg TV. "It’s fair to say that nobody really expected that to happen. It’s all about China. It’s the China stimulus that caused this rally."

Zinc for delivery in three months advanced a sixth day, climbing 1.2 percent to settle at $2,406 a metric ton at 5:51 p.m. on the LME. Copper, lead, nickel and tin slipped, while aluminum gained. Markets in China are closed this week.

The outlook has also improved following OPEC’s agreement to cut oil output, which drove up prices and increased production costs for metals.

In other metals news: 

  • Zinc canceled warrants, or orders to remove the metal from LME-tracked warehouses, jumped 25 percent to 33,250 tons, the highest since June 15. Bookings were seen in New Orleans and Singapore.
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