LONDON: Copper prices pushed to the strongest levels since March 2013 on Friday as U.S. politicians moved closer to agree on long-awaited stimulus spending that would boost the economy.
Copper has regularly hit new multi-year highs and shares touched record levels over the past week, boosted by news about the roll-out of COVID-19 vaccines and robust data about China’s economic recovery.
U.S. House Speaker Nancy Pelosi said on Friday there was momentum behind talks on a coronavirus relief bill while U.S. President-elect Joe Biden said a grim jobs report underscored the need for urgent action.
“The U.S. stimulus news has definitely helped risk appetite, which has been strong ever since the good news about vaccines,” said Samuel Burman, assistant commodities economist at Capital Economics.
“We think industrial metals prices will hold steady for the next couple of months, supported by this investor risk appetite and also by the strong economic activity out of China.”
Once stimulus starts to be withdrawn in China, however, prices are likely to pull back next year, Burman added.
Three month copper on the London Metal Exchange was up 1% at $7,749.50 a tonne by 1700 GMT, after touching $7,774, its highest since March 2013.
Copper, often used as a gauge of global economic health, was poised for a fifth straight weekly gain with a rise of 3.4%.
However, with London copper already leaping 78% since March lows and Shanghai prices rallying 65% in the same period, the contracts may soon run out of steam, analysts said.
Also supporting metals was a weak dollar index, which touched a 2-1/2 year low, making commodities priced in the U.S. currency cheaper for buyers using other currencies.
Lead has underperformed this week and is on track for a decline of 3%, pressured by selling on the Shanghai Futures Exchange, Alastair Munro at broker Marex Spectron said in a note.
Lead was the only LME metal in the red, edging down 0.02% to $2,032 a tonne.
“Noticeably SHFE open interest has now fallen 5,600 lots over the past two sessions on apparent long liquidation.”
LME aluminium gained 0.9% to $2,046 a tonne, zinc inched up 0.02% to $2,756.50, nickel jumped 2.8% to $16,400, and tin added 0.3% to $18,960.