Copper price highest in 6 weeks as flooding in China raises supply concerns

 

Flooding has caused at least $10 billion in damage to central city of Zhengzhou (Credit: Screenshot from Al Jazeera via You tube) 

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Copper prices jumped on Monday as floods in China sparked demand hopes at a time when inventories are falling.

Copper for delivery in September rose 4.5% from Friday’s settlement price, touching $4.602 per pound ($10,120 per tonne) midday Monday on the Comex market in New York.

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Benchmark copper on the London Metal Exchange was up 0.9% at $9,604.50 per tonne in official trading, after touching its highest since June 16 at $9,665 per tonne.

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Floods in central China, especially in the industrial and transport hub city of Zhengzhou in Henan province, have raised supply concerns and demand for rebuilding damaged infrastructure.

Flooding has caused at least $10 billion in damage, according to state media.

“Sentiment has brightened again in the last few days, reflected in the copper price,” Commerzbank analyst Daniel Briesemann said, adding he believed copper was due for a correction.

A Singapore-based trader said the market was pricing in disruptions to output from floods in Henan and demand for reconstruction.

Related read: Are copper prices in a supercycle? A 120-year perspective.

Copper prices have been advancing after China revealed that will release fewer metals reserves than expected.

China will sell another 30,000 tonnes of copper, 90,000 tonnes of aluminum, and 50,000 tonnes of zinc at auction from its state reserves on July 29.

The auction will mark the second sale this month as the government aims to rein in skyrocketing commodity prices.

“It is slightly less than the market expected but it should be priced in already as it’s pretty well flagged,” said Anna Stablum, a commodities broker at Marex Spectron.

(With files from Reuters)