By Ira Iosebashvili and Stephanie Yang
Copper prices rallied for the 10th consecutive day, their longest winning streak in at least 28 years, as traders bet that the global economy may be picking up after a long period of sluggish growth.
Many investors view copper as a bellwether for economic activity since the metal is a key component in a variety of goods, from refrigerators to smartphones. Other base metals, such as aluminum, nickel and zinc, also have mounted big rallies in recent days.
Copper closed at $2.2610 a pound Friday, up 7.25 cents, or 3.3%, for the week. Copper prices advanced 8.5% over the 10-day period on the Comex division of the New York Mercantile Exchange.
The current 10-day winning streakis the longest for the front-month copper contract in available data going back to 1988. This surpasses a nine-day stretch that ended on Dec. 21, 2004.
Recent signs that manufacturing and inflation in China and the U.S., the world's two largest economies, may have turned a corner have helped drive up copper prices.
China's industrial sector picked up last month, with an official gauge of factory activity rising to its highest level in two years, data showed Tuesday. In the U.S., a gauge of factory activity rose in October, a sign that manufacturing could be stabilizing after two years of challenging conditions.
Tai Wong, head of base- and precious-metals trading at BMO Capital Markets, said copper stockpiles tracked by the London Metal Exchange have declined 10% since Oct. 25. Falling inventories are generally considered a positive sign for demand, as copper is moved out of warehouses for consumption.
"Whenever you have draws like that, that will help" copper prices, Mr. Wong said.
The recent copper-price rally could reverse because of any number of factors, from a sudden drop in oil prices to extended political uncertainty stemming from a contested U.S. election.
Many traders and analysts also remain cautious about the outlook for copper given the high production and a lackluster outlook for global manufacturing.
Market participants are watching copper's gains closely, however, as an upturn in global manufacturing would ripple far beyond its immediate effect on copper and other commodities.
For years, sluggish factory activity has been one of the most obvious symptoms of a lackluster postcrisis recovery that has forced central banks to keep stimulus flowing and interest rates at record lows.
"The story has really turned around for China in the past few months," said Michael Dragosits, a strategist at TD Securities.
Besides last month's manufacturing data, Mr. Dragosits pointed to Chinese car sales, which jumped 29% in October for the biggest gain since January 2013, as well as other indicators that show a higher level of financing activity from banks.
China, the world's second-largest economy, also is its biggest commodity consumer, accounting for some 45% of the demand for copper.
Some market participants, however, are hesitant to turn more bullish on copper without further evidence that a turnaround is under way.
"One would like to see trending economic growth, rather than a few isolated data points," said Michael Turek, head of base metals at BGC Partners.
Write to Ira Iosebashvili at firstname.lastname@example.org and Stephanie Yang at email@example.com
(END) Dow Jones Newswires
November 04, 2016 18:41 ET (22:41 GMT)
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