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LONDON, Dec 16 (Reuters) - Copper prices rose towards eight-year highs on Wednesday as optimism about strong demand in top consumer China was reinforced by falling inventories, a lower dollar and the rollout of COVID-19 vaccines in some major economies.
Benchmark copper on the London Metal Exchange (LME)had gained 0.7% to $7,837 a tonne at 1700 GMT. The metal used widely in the power and construction industries hit $7,973.50 last Friday, its highest since February 2013.
“Chinese manufacturing data were robust, we had quite good U.S. industrial production data and the dollar is weaker, which helps the entire commodities space,” said Commerzbank analyst Daniel Briesemann.
CHINA: Factory output in China grew at its fastest pace in 20 months in November as revived consumer spending and a gradual easing of COVID-19 restrictions in major trading partners lifted demand for the country’s manufactured goods.
INVENTORIES: Copper stocks MCUSTX-TOTAL in LME-registered warehouses, at 133,125 tonnes, are down nearly 30% since the middle of October. Much of that draw has gone or is heading to China, traders said.
DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for holders of other currencies, which could boost demand and prices.
UNITED STATES: Manufacturing output in the United States rose more than expected in November, boosted by motor vehicle production.
VACCINES: Europeans are set to start receiving coronavirus vaccines before the new year after the regional drug regulator accelerated its approval process following the launch of immunisation campaigns in the United States and Britain.
TECHNICALS: The relative strength index for copper has climbed back above 70 into overbought territory.
ALUMINIUM: Stocks of aluminium in LME warehouses MALSTX-TOTAL rose by 19,850 tonnes to more than 1.37 million tonnes. Most of those deliveries were to warehouses in Port Klang, Malaysia.
OTHER METALS: Aluminium was up 0.3% at $2,035 a tonne, zinc climbed 0.5% to $2,830, lead slipped 0.3% to $2,046, tin was up 1.2% at $19,935 and nickel lost 0.9% to $17,415. (Reporting by Pratima Desai; Editing by David Gregorio and David Goodman)