China’s Purchasing Managers Index for the manufacturing sector helped base metals avoid any further dramatic falls after Wednesday’s decline, said Commerzbank in a research note.
According to Commerzbank, the PMI for February rose to 51 from 50.5 in January, thus remaining above the 50 mark that separates economic expansion from contraction.
“At the same time, the index confirms that economic activities are recovering following the New Year’s celebrations in January and points to higher demand for metals,” Commerzbank added.
The bank says this is also increasingly reflected in the London Metal Exchange’s inventory statistics, with copper stocks early this week dropping below 300,000 metric tons for the first time in 2½ years.
“Destocking is also likely to continue, given for example that the production problems in Chile, by far the world’s largest producer, show no signs of abating,” Commerzbank continued.
The National Statistics Institute of Chile reported Wednesday that Chilean copper production in January decreased by 7.6% year-on-year to 396,300 tons, with low ore grades and technical problems cited as reasons for the decline.
As of 7:40 a.m. EST, LME copper was $48.50 higher at $8,547.50 a metric ton. Aluminum, nickel, lead and tin are also higher, although zinc softened.
Source: Commodity Online