Copper rings made from copper electrolytic powder sit after pressing in Verkhnyaya Pyshma, Sverdlovsk, Russia. (Photographer: Andrey Rudakov/Bloomberg)  

Copper's Winning Rally Is the Longest in a Generation

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(Bloomberg) -- Copper just capped its best run in almost three decades.

The metal is on its longest winning streak since 1989, topping $7,300 a metric ton in London, on optimism about increased demand, supply disruptions in China and a weaker dollar.

Jiangxi Copper Co. this week was told to cut production for at least a week before a new assessment is made on local pollution levels. Goldman Sachs Group Inc. expects “strong demand and cost inflation to drive the price higher in 2018,” analysts including Jeffrey Currie wrote in a report dated Dec. 19.

The prospect of China slowing processing while maintaining consumption of the metal “is going to make for a strong copper market, and we’ve continued to punch through four-year highs,” Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said by telephone.

Three-month copper gained 0.7 percent to settle at $7,289 a metric ton at 5:52 p.m. on the London Metal Exchange, after earlier touching $7,312.50, the highest since January 2014. Thursday’s close marked the 10th straight day. Aluminum rose as high as $2,284.75 a ton, the highest since March 2012.

Base metals have posted the biggest returns among raw materials in 2017, with copper, aluminum, zinc and nickel leading gains on the Bloomberg Commodity Index. The advances have been fueled by faster demand and supply disruptions, including plant halts in China as officials press home a battle against pollution. On Thursday, further support came from a weaker U.S. currency as the dollar fell for a second day.

“Dollar weakness, funds returning after the Christmas break are extending the metals rally, adding fuel to bullish sentiment,” Xu Maili, an analyst at Everbright Futures Co., said by phone from Shanghai. The LMEX Index, which tracks the six main metals, posted a 10th gain on Thursday.

Still, much of the rally has occurred over the holiday period on the back of thin trading volumes, with Saxo Bank A/S cautioning that moves should be taken with a pinch of salt. The forward curve remains in contango -- a situation when future prices are higher than near-term contracts -- and stockpiles tracked by the LME have been rising this week.

The rally in metal prices has been a boon for mining equities. The Bloomberg World Mining Index headed for its highest close September 2014 in its best month since July. Freeport-McMoRan Inc., the world’s biggest publicly traded copper producer, leads gains this month with a 38 percent surge while top U.S. aluminum maker Alcoa Corp. climbed 29 percent.

Metals news:

  • A Tale of Two Streaks in Metals and Agriculture to Close 2017
  • Red-Hot Copper Poised for Eighth Straight Quarterly Gain: Chart
  • China’s Tongling Agrees on Lower Copper Processing Fees for 2018
  • Commodities Lure Investors for Third Year as Growth Accelerates
  • Copper Charts Show 1980s-Style Streak May Be Nearing End: Chart

©2017 Bloomberg L.P.

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