Copper leapfrogged the pivotal $3 a pound level on Wednesday after a key gauge of the Chinese manufacturing sector, the world’s top consumer of the metal, showed new orders jumping to a nine-year high.
Copper for delivery in December trading on the Comex market in New York changed hands for $3.0415 a pound ($6,705 a tonne) in early afternoon trade, up 1.7% from Tuesday’s settlement.
Wednesday’s move brings gains for 2020 to 9.1% and 57% since the covid-19 lows struck in March. A fortnight ago, the bellwether metal reached the highest price since June 2018.
Capital Economics said China’s September PMI reading suggests that “the economy is now entering a period of above-trend growth, which is indisputably good news for the prices of commodities, particularly industrial metals.”
Beijing’s official manufacturing PMI jumped to a more than a two year high of 51.5 (a reading above 50 indicates expansion), up from 51.0 in August, while the survey by Caixin, which gives a clearer picture of activity outside the state-owned sector, came in at 53.
Caixin’s new orders subindex expanded at a rate not seen since early 2011, while new export business expanded at the fastest rate (54.8) since August 2017, which bodes well for a recovery in manufacturing in the rest of the world.
The Wall Street Journal reported a measure from Citigroup that tracks end uses of copper in the country in various sectors, including auto and appliance makers, showing the three-month average reaching its highest level since early in 2017.