MELBOURNE, July 13: London copper surged through the $5,000 mark on Wednesday for the first time since late April, as renewed appetite for risk triggered a furious flurry of short-covering. Prospects of solid U.S. growth and accommodative economic policy in major markets whet investor risk appetite that had been damaged by uncertainty from Brexit. A weaker dollar and looser fiscal policy raise the allure of hard assets such as commodities that tend to hold their value as that of paper money falls. “There’s been a definite risk-on tone which has been driving markets,” said analyst Daniel Hynes of ANZ in Sydney. “In base metals, the market is definitely taking a glass half full approach at the moment and it’s probably a bit premature, given concerns over China’s growth and the questions over rising inventories.” London Metal Exchange copper jumped to $5,032 a tonne, its strongest since April 29, before trading at $5,006 by 0327, up 2.8 percent and adding to 2.5-percent gains from Tuesday. The rally comes despite a dim fundamental outlook for prices, with a burst of new mine supply already feeding into global exchange inventories. LME copper stocks are the highest since February, having jumped by half since early June. Shanghai Futures Exchange copper rallied 5.5 percent to 39,090 yuan ($5,848) a tonne, having hit the highest since March 7. Suggesting short-holders have been covering their losing positions, open interest has dropped by 27 percent since peaking on June 1, although it climbed again on Wednesday. “Market players keep saying more easing is expected … funds have been buying and stopping out of shorts, and in particular stopping out some big bearish downside option plays,” said a trader in Singapore. Elsewhere, ShFE nickel gained 4.6 percent, while ShFE zinc rallied 2.1 percent, on prospects that steel makers will rush to boost output ahead of a government mandated shutdown later this month. LME nickel hit $10,635 a tonne, its highest since October, while LME zinc marked a new 13-month top. Aluminium was a few dollars short of its strongest in a year. Meanwhile, mining group Eramet said that the board of its nickel subsidiary SLN in New Caledonia has approved a 200 million euro ($222.28 million) loan from the French government, aimed at helping the loss-making business survive a severe market downturn. (AGENCIES)
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