NEW YORK (BLOOMBERG) – Copper advanced to the highest level in almost four months after comments by Federal Reserve Chair Jerome Powell and the looming shutdown of a large mine in Panama emboldened bulls.
The metal rose as much as 2 per cent on Friday, supported by an unexpected pickup in Chinese manufacturing activity. It extended gains following a speech by Powell, who reinforced expectations for monetary loosening to come early next year.
US rate hikes have been a major headwind for metals this year, weighing on key consumers like construction firms and manufacturers while undercutting investor demand for the commodities. Copper climbed 4.4 per cent in November, the first monthly increase since July.
The turnaround for copper comes just as the supply is set to be squeezed by Panama’s plans to shut down First Quantum Minerals Ltd’s Cobre operation, which produces about 1.5 per cent of the world’s supply. The mine, which has been the target of mass protests from environmentalists and labour unions, already suspended output last month after a blockade of boats restricted key supplies.
The gap between the demand and supply of copper ore is set to widen next year, according to BloombergNEF. Two key producing regions – Chile and Peru – are facing bottlenecks in increasing output, while demand is rising in China, it said. Copper prices are likely to remain elevated, it added.
Copper rose 1.7 per cent to USD8,610.50 a tonne on the London Metal Exchange by 5.46pm local time. Most metals were higher, with tin adding 2.6 per cent and zinc 2.2 per cent. Lead was little changed.
Shares in mining firms also rallied on Friday, benefiting from analyst upgrades to Anglo American Plc, Antofagasta Plc and Rio Tinto Plc.
