By Ed Ballard
Copper prices climbed Tuesday after data showed inflation picked up in China last month, sending a reassuring signal about demand from the world's largest consumer of industrial metals.
Copper for March delivery was recently up 2.9% at $2.6130 a pound on the Comex division of the New York Mercantile Exchange, on track for its biggest one-day gain since Nov. 10.
China's Producer Price Index rose 5.5% last month, higher than analysts' expectations and up from 3.3% in November, the National Bureau of Statistics said late Monday.
Analysts said a fourth straight month of rising prices suggests China's economy is on a firmer footing. Looking ahead, Chinese trade data due Thursday should shed more light on the strength of Chinese demand.
A weaker dollar was also supporting metals Tuesday, making dollar-priced commodities cheaper for holders of other currencies. The WSJ Dollar Index was 0.1% lower at 92.53.
Analysts at Citi said they expect production outages to push the price of copper above $6,000 a ton this year. Citing data from consultancy firm Wood Mackenzie, they pointed to unusually low levels of mine disruption in 2016, and said the situation is likely to return to normal this year.
"The 2017 growth rate was supported [by] much faster-than-expected project ramp-ups in Peru in particular, and much lower than statistically normal rates of production losses through the year. We believe both of these factors will be difficult to replicate in 2017," Citi wrote.
A reduction in copper stocks in LME warehouses points to a slightly tighter market, another supportive factor for prices in the short term. Stocklevels have fallen below 300,000 tons this week after surging above 345,000 tons in late December.
--Stephanie Yang contributed to this article
Write to Ed Ballard at email@example.com
(END) Dow Jones Newswires
January 10, 2017 10:55 ET (15:55 GMT)
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