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Copper Hits 3-Year High, Buoyed by Stronger Chinese Economy

September 6, 2017 at 16:53 by Andrew Moran

Copper futures are trading at their highest levels in three years, supported by better-than-expected Chinese economic data and heightened geopolitical tensions. The industrial metal made further gains by reports that output has fallen while demand has remained considerably strong.

December copper futures rose $0.0165, or 0.53%, to $3.144 per pound at 16:36 GMT on Wednesday. The red metal is trading at its best level since September 2014. Year-to-date, copper prices have advanced nearly 25%; over the last 12 months, the industrial has surged close to 50%.

Copper is benefiting from an improving Chinese economy, which is the world’s largest consumer of the red metal. The industrial metal’s price has been further boosted by Beijing’s recent environmental policies aimed at limiting air pollution, a move that would hurt production capacity.

A new report found that the world’s biggest producer of copper experienced a major drop in output. Chile’s Codelco reported on Tuesday that first-half production tumbled 5.3%. As investors remain optimistic about copper’s meteoric rise, executives at Codelco are skeptical, including Chair Oscar Landerretche, who told a mining conference in Santiago:

I [am] a little skeptical…in the short-term. It [is] true that all of the fundamentals are good in the medium- and long-term…but I would be very cautious.

Analysts have been saying for the last couple of months that the international copper surplus will dwindle for the rest of 2017. If demand continues to surge, then this would be a boon for copper.

The Chinese yuan renminbi is climbing, while the US dollar is sinking fast. A weaker greenback is good for dollar-denominated commodities like copper because it makes it cheaper for foreign investors to purchase.

Other metals are trading relatively flat. December gold futures dipped $1.20, or 0.09%, to $1,343.30 per ounce. October silver futures climbed $0.08, or 0.47%, to $18.02 an ounce. October platinum futures jumped $1.40, or 0.14%, to $1,010.40 per ounce. October palladium futures declined $18.60, or 1.94%, to $938.40 an ounce.

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