LME copper jumps 4% to 16-month high on US infrastructure hopes

Rodrigo Garrido | Reuters

London copper jumped 4 percent to its highest in nearly 16 months on Thursday on expectations that policies under U.S. President-elect Donald Trump could spur infrastructure spending.

Shanghai copper, aluminium and nickel also surged limit-up as London copper gained and as Trump's policies could require China to keep easy monetary policies in place.

In London, all major contracts except for tin rose to highs not seen since at least mid-2015 after recently finding their feet on seasonal demand strength ahead of the Christmas and New Year holidays.

Trump's policies

"The markets are now looking at Trump's policies and seeing more growth there around infrastructure, and in general," said analyst Lachlan Shaw of UBS in Melbourne.

"To the extent there was raising of trade barriers between the U.S. and China, I think it's more likely that China would stimulate domestically, a positive for construction and for metals."

Republican President-elect Donald Trump focused on Wednesday on his 73-day transition to the White House as rival Hillary Clinton promised to bury the bitterness of their long presidential race and work to unify a divided country.

London Metal Exchange copper was up 3.6 percent at $5,550 a tonne as of 0357 GMT, building on 3.4 percent gains from the previous session.

It went as high as $5,625 a tonne on Thursday, the most expensive since July 15, 2015.

Cautious metal traders

Shanghai Futures Exchange (ShFE) copper built on overnight gains to hit its maximum daily permitted limit of 6 percent to 43,910 yuan ($6,479) a tonne.

Shanghai aluminium climbed by a limit-up 4 percent, while ShFE nickel also struck 6 percent upside limit.

Shanghai zinc and lead advanced more than 3 percent.

Other LME metals were up between 1 to 3 percent, although aluminium came under selling pressure to trade back near flat.

The Shanghai Futures Exchange warned investors to be prudent and rational, given the wild price swings and raised its transaction fees for rebar and tin futures trades from Nov. 11.

"We think it may not take too long for regulatory bodies/exchanges to increase risk control on other metals' futures trading," Argonaut Securities said in a note.

Still, metals traders said they were cautious as the rally could mean the market is on the precipice of an equally steep reversal.

Backing base metals, prices of steel and its raw materials in China have soared this week to their highest levels in years, backed by a sustained rally in coal and signs of a pickup in the world's second-biggest economy.

China's factory prices rose 1.2 percent year on year in October, the fastest pace since December 2011, data showed.