Copper hit its highest in nearly six weeks on Monday, as investors sold equities for more attractive assets, with prices further supported by supply worries and hopes of more metals’ demand for rebuilding infrastructure after floods in China.
Three-month copper on the London Metal Exchange CMCU3 increased 0.9% to $9,600.50 a tonne by 0530 GMT, after rising as much as 1.6% to $9,665 a tonne, its highest since June 16.
The most-traded September copper contract on the Shanghai Futures Exchange SCFcv1 advanced 1.6% to 70,670 yuan ($10,899.47) a tonne, after hitting a June 15 high of 71,150 yuan a tonne earlier in the session.
Chinese shares slumped as education and property sectors dropped on worries over heavy-handed government regulations, making commodities like metals an attractive alternative investment.
Floods in central China, especially in the industrial and transport hub city of Zhengzhou in Henan province, have raised supply concerns and demand for rebuilding damaged infrastructure, which will consume industrial metals.
“Because of the crackdown in regulation… market switched away from equities to metals. So, ShFE fresh buying has been relentless,” said a Singapore-based trader, adding that metals benefit from reflation trade.
“Market is also pricing in disruptions to output from Henan floods and demand for reconstruction,” the trader said.
FUNDAMENTALS
* ShFE nickel SNIcv1 hit a five-month high at 146,870 yuan a tonne, tin SSNcv1 climbed 0.9% to 232,560 yuan a tonne and aluminium SAFcv1 reached its highest since May 19 of 19,750 yuan a tonne.
* LME nickel CMNI3 touched its highest since Feb. 25 at $19,645 a tonne, while tin CMSN3 fell 0.8% to $34,235 a tonne.
* ShFE copper inventories CU-STX-SGH fell to their lowest since Feb. 10 at 96,087 tonnes while the Yangshan copper premium SMM-CUYP-CN rose to a 11-week high of $43 a tonne, indicating improving demand for imported metal.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Ramakrishnan M, Kim Coghill and Uttaresh.V)