The copper price was once again within sight of more than two-year highs on Monday and nickel reached an 11-month peak after Chinese data showed growth in the world’s second-largest economy is gathering momentum.
On the Comex market, copper for delivery in December added over 1% to $3.1080 a pound ($6,850 a tonne) in brisk trade, with more than 1.2 billion pounds of the most active contract traded by early afternoon in New York.
Monday’s trading brings the bellwether metal within sight of levels last seen in June 2018 and brings the recovery since the height of the covid-19 induced sell-off, which sent the copper price crashing to below $2.00 a pound, to 57%.
The robust numbers from China, which consumes more industrial metals than the rest of the world combined, also lifted nickel prices, which hit $15,815 a tonne in London, the highest since November 2019.
Data released overnight showed China’s economy continued its rapid rebound in the third quarter, with activity across a range of sectors. GDP expansion accelerated to 4.9% during Q3, up from 0.7% in the quarter to end-June.
Metal intensive industries showed the strongest growth, with a further pick-up in industry and construction last quarter, from 4.7% year on year to 6%.
In a note, Capital Economics says monthly data show momentum is building going into the final quarter of 2020.
Industrial production came in way above expectations, rising from 5.6% in August to 6.9% in September compared to the same months last year. Fixed investment expanded 0.8% year-to-date, implying that capital spending grew 7.6% in September.
Julian Evans-Pritchard, Capital Economics Senior China Economist, says the economy is becoming less reliant on investment-led stimulus and that growth will continue to pick-up in the near-term:
“Fiscal policy is set to remain supportive until at least the start of next year, which should keep activity in industry and construction strong. Meanwhile, tightening labour market conditions and improving consumer confidence mean that the recovery in consumption and services activity probably has further to run.”