(Bloomberg) -- Copper registered its biggest one-day gain since mid-July amid expectations of supply remaining tight and that the Federal Reserve is done raising interest rates.
The US dollar extended its weakness on Monday as investors added to bets that the Fed’s tightening cycle has ended after a series of US data points showed the world’s biggest economy is slowing. Higher borrowing costs and a strong dollar have been key headwinds for metals in the past two years.
Warnings of a shutdown at First Quantum Minerals Ltd.’s Panama mine fueled bets that mined copper could remain tight in the near term, while strikes at MMG’s Las Bambas mine in Peru supported such views. There was also relatively bullish news from raw-materials supply talks, with at least one major Chinese copper smelter accepting lower fees from mining companies. The lower treatment and refining charges point to a tightening market for copper concentrate.
“Copper is being driven by a variety of fundamental and technical factors, although bullish factors still seem to be in the driving seat for now,” said Dan Smith, head of research at Amalgamated Metal Trading. “The raw materials market still looks very tight” while “political problems in Panama continue to overshadow” First Quantum’s mine, with output already being scaled back.
Copper rose to settle 2% higher at $8,430.50 a metric ton on the London Metal Exchange, the biggest daily jump since July 13. All other base metals except lead rose, with aluminum gaining 1.7% and zinc up 0.3%.
--With assistance from Eddie Spence and Martin Ritchie.
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