Copper prices have hit a nine-month high as firmer-than-expected economic growth figures from China boosted expectations for higher demand in the world’s top metals consumer.
China’s economy grew at a 6.4 per cent pace in the first quarter from a year earlier, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement.
“The data is confirmation that there are clear tailwinds to Chinese growth into the second quarter and mid-year,” said Deutsche Bank metal strategist Nick Snowdon.
Benchmark copper touched its highest since July 3 at $US6,608.50 per tonne before finishing up 0.9 per cent at $US6,556.
China, which is in the midst of a trade conflict with the United States, ramped up fiscal stimulus this year to support the world’s second largest economy after a slew of disappointing data pointed to a potential slowdown.
But some analysts warned it may be too early to say the GDP data was a sign of a full turnaround in the Chinese economy and a break from narrow trading ranges for metals.
“Whilst potentially the first quarter represents a key turning point for the balance of 2019, as to whether it presents a panacea to the mean reversion/range trading so evident in our space seems unlikely,” said Alastair Munro at broker Marex Spectron.
China’s crude steel output grew 10 per cent in March compared with the same month a year ago as mills ramped up operations amid a profit margin recovery and less stringent curbs on production in the country’s anti-smog crackdown.
China’s aluminium production fell 3.6 per cent on a daily basis in March from the previous two months to its lowest rate since October, pressured by winter curbs on industry and low prices.
This pushed Shanghai aluminium up as high as 13,995 yuan ($US2,092.59) a tonne, its highest intra-day level since December.
LME aluminium inched down 0.3 per cent to $US1,850 per tonne.
A railway that carries zinc from major producers such as Glencore , MMG Ltd and South32 across Australia’s Outback is expected to reopen this month after it was damaged in floods.
Zinc is coming under sustained attack from bearish funds.
The trigger for the assault was Tuesday morning’s London Metal Exchange stocks report, showing 10,625 tonnes of inflow into exchange warehouses.
Zinc climbed 0.4 per cent to $US2,819.50 per tonne, lead gained 1.4 per cent to $US1,946 while tin was down 0.5 per cent at $US20,405 per tonne.
Nickel did not trade in closing rings, nor were there any bids or offers. In electronic trading, prices were down 0.7 per cent at $US12,865 a tonne.