By Jim Williams
Copper futures rallied more than 1% to start the week as investors applauded an upbeat report on China’s manufacturing sector.
Data released over the weekend showed that China’s official manufacturing PMI rose to a five-month high of 50.8 in May, above expectations for 50.6 and up from 50.4 in April.
The Asian nation is the world’s largest copper consumer and manufacturing numbers are used as indicators for future demand growth.
“Chinese manufacturing advanced at it’s fastest pace in five months,” states Michael Turek, Senior Director and Head of Metals Desk at Newedge. “While one remains wary of an isolated data point it does appear as though Chinese centralized government initiatives to stimulate economic activity on the mainland are having some positive effects.
“One expects that this concerted stimulus program will be further developed and that should prove an encouragement for the metals to belatedly realize some of their upside potential and overcome some overhead resistance.”
Edward Meir an analyst at INTL FCStone in New York said that “Metals have the look and feel of wanting to push higher, although slowing growth in China should keep overextended rallies somewhat in check.”
Prices for copper used in plumbing and wiring, rose 3.2% in May as exchange monitored inventories declined. On the Comex division of the New York Mercantile Exchange, copper for July delivery rose to a session high of $3.169 a pound, the most since May 29, before trimming gains to last trade at $3.165 during European morning hours, up 1.34%, or 4.2 cents. High-grade copper for July delivery fell 0.7% to $3.12 a pound on Friday, but prices are up 3.2% for the month.