(Bloomberg) -- Copper rose from its highest close since mid-2022 as industrial metals posted broad gains on gathering optimism over world demand.
The macroeconomic backdrop for metals — with global manufacturing starting to improve and the Federal Reserve widely expected to cut rates — is pushing prices higher. All contracts on the London Metal Exchange have gained this year.
Copper is entering a second bull market this century, with the potential for further gains driven by “booming decarbonization-related demand growth,” Citigroup Inc. said in a note.
The metal used for electric wiring has been the subject of many bullish calls in recent years by investors who believe mine supply will struggle to match demand growth from areas like renewable energy and electric-vehicle infrastructure.
Still, there are other reasons for caution. Spot copper is trading at a $100-a-ton discount to 3-month LME futures — a so-called contango structure that can indicate ample immediate supply. Furthermore, global inventories have risen to the highest since June 2020 and spot sales in China are also trading at a discount to futures contracts.
Base metals will face “a big test” if US inflation data later Wednesday comes in above expectations, Chaos Ternary Research Institute said in a note. That could delay the Fed's pivot to looser monetary policy.
Copper rose as much as 0.9% to $9,503 a ton in London before trading at $9,482 as of 9:05 a.m. local time. Zinc rose 2.6% and tin advanced 4%.
--With assistance from Jason Rogers.
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