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Republicans and Democrats in the US Senate remain in a stalemate over a financial bailout plan in the lead-up to the presidential election on November 3.
But the mood in the market was firmly risk-on this morning despite a looming air of caution, with hopes of a resolution overtaking any residual negative sentiment.
Positive Chinese data has provided a further boost for the base metals, raising expectations among market participants for the implementation of further infrastructure spending initiatives laid out by President Xi Jinping.
But some analysts are attributing the gains made across the base metals complex this week to the annual LME Week proceedings, which are currently taking place online owing to the Covid-19 pandemic.
“I think the upward price momentum we’re seeing is partly due to the ‘LME Week effect,’” Fastmarkets research analyst Andy Farida said, referring to the bullish vibe that the event typically generates.
The LME three-month copper price remains particularly sensitive to macro developments in Asia, rising by 1% on the previous day’s close this morning, trading most recently around $6,966 per tonne.
And the threat of strikes in Chile earlier this week in retaliation to potential redundancies at Canadian Lundin’s Candelaria operations in the region was also supportive of prices.
“For copper the magic words Chile and strike. The latter was Codelco workers taking to the streets in Santiago to protest at proposed layoffs and production at Lundin Mining’s Candelaria operation was shut down as the unions ordered workers to commence strike action,” Kingdom Futures chief executive officer Malcolm Freeman said in a morning note.
“Overlaying all of this is data showing the Chinese industrial machine is looking to really start accelerating in Q4. Refined copper output was up 10.3% in September year on year at a daily rate of 33,300 tons Metals intensive industries showed the strongest growth in the industrial and construction sector with Q3 growth rising from 4.7% to 6% year on year,” Freeman added.
LME copper futures are now trading at their highest since February 2018. Trading volumes were still significant today with almost 8,500 lots of the red metal changing hands by 10am, the most of the complex.
A 1,625-tonne outflow of copper from US and European sheds as of 9am this morning and a 425-tonne fresh cancelation as of the same time offered additional price support.
“Even though LME Week is virtual, we still have the usual bounce for copper,” a China copper trader told Fastmarkets.
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