Feb. 13 (Bloomberg) -- Industrial-metal prices may climb 7.4 percent by June as a rally in the yuan boosts demand for dollar-priced commodities in China, the world's biggest consumer of copper and aluminum, according to TD Securities Inc.
The CHART OF THE DAY shows the Standard & Poor's Industrial Metal Spot Index gained 2.8 percent last month to 396.34, while China's yuan strengthened to 6.219 per dollar, a 0.2 percent gain. The S&P gauge may rise to 430 by the end of June, while the yuan reaches 6 per dollar, said Bart Melek, the head of commodity strategy at TD Securities in Toronto.
"As China continues to show strength in manufacturing, exports and domestic consumption, industrial metals will see higher prices," Melek said in a telephone interview. "The fact that the Chinese currency has been strengthening bodes well for base metals and industrial precious metals."
A government-backed survey of purchasing managers showed manufacturing in China expanded in January, and a separate gauge from HSBC Holdings Plc and Markit Economics rose to the highest in two years, signaling the recovery may be gaining momentum. Copper imports by China advanced 2.9 percent last month from December.
The central bank widened the yuan's trading band against the dollar in April. The most-accurate forecasters for the yuan predicted a 2 percent advance to end the year at 6.1 per dollar, according to Bloomberg Rankings.
Global demand for copper will climb 4.7 percent in 2013, driven primarily by a rise in Chinese consumption, Australia & New Zealand Banking Group Ltd. said on Feb. 8. The Asian nation's aluminum demand will increase 9 percent, according to the report.
David Fuller's view The S&P GSCI Industrial Metals Index
Spot (historic & weekly)
shows base formation characteristics and I have reviewed the six leading industrial
metals immediately below.
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