Copper gained in New York and London after manufacturing in China, the world’s largest user, grew at a faster pace last month.
The Chinese purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, a government-backed report showed. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4. China’s demand for commodities from coal to iron ore stoked growth in Australia, where the economy expanded 1.2 percent in the second quarter, the fastest pace in three years.
“This is good news for metal markets as China is by far the largest consumer of metals,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, in a report today.
Copper for delivery in December gained 7 cents, or 2.1 percent, to $3.44 a pound at 7:37 a.m. on the Comex in New York.
Copper for delivery in three months rose 1.5 percent to $7,551 a metric ton on the London Metal Exchange. It rose as high as $7,585 a ton, the highest intraday price since April 27.
The August reading for the Chinese government index was more than the median 51.5 forecast in the Bloomberg survey of 17 economists. Fifty is the dividing line between expansion and contraction.
The HSBC PMI for July had shown the first shrinking in manufacturing in 16 months, and the government gauge, published by the Federation of Logistics and Purchasing, was the weakest since February 2009. A gauge of manufacturing in the 16-nation euro region declined to 55.1 from 56.7 in the previous month, London-based Markit Economics said today. That’s above an initial estimate of 55 released on Aug. 23. It’s the 11th straight month with a reading above 50, indicating expansion.
ISM Report
In the U.S., copper’s second largest consumer, the Institute for Supply Management’s factory index probably declined to 52.7 in August, the lowest since September 2009, according to the median estimate of 78 economists surveyed by Bloomberg News. The Tempe, Arizona-based ISM’s report is due at 10 a.m. in Washington.
The LME contract rose 2 percent in August after gaining 12 percent in July, posting the biggest monthly jump since August last year. Inventories of copper tracked by the LME dropped 3.6 percent last month, falling for the sixth consecutive month.
Reduced metal inventories “suggest that real commodity demand has not fallen off a cliff,” RBS’s Major said.
Mined copper ore will be in short supply for at least five years, forcing Sumitomo Metal Mining Co., Japan’s second-biggest smelter, to keep producing at a reduced rate, the company said.
“It’s a seller’s market for concentrates and I don’t think this will change before 2014 or 2015” when supplies from new projects increase, Nobumasa Kemori, president of the company, said in an interview yesterday.
LME Stockpiles
Stockpiles rose 0.1 percent today to 398,775 tons after yesterday reaching the lowest level since Nov. 11, according to daily data from the bourse. Stockpiles have fallen 21 percent this year, on course for the first annual drop since 2004.
Metal booked to be withdrawn from inventories, or so-called canceled warrants, gained 1 percent to 30,550 tons, daily exchange data showed. Aluminum for three-month delivery on the LME rose 0.8 percent to $2,075 a ton. Inventories in LME-monitored warehouses dropped 0.2 percent to 4.4 million tons, the seventh consecutive decline.
Zinc gained 2.7 percent to $2,120 a ton, tin rose 1.9 percent to $21,400 a ton, nickel advanced 2.4 percent to $21,190 a ton and lead climbed 2.2 percent to $2,115 a ton.