SHANGHAI: Chinese stock indices climbed to 16-month highs as copper and zinc rose to records and Yunnan Chihong Zinc & Germanium Co said its first-quarter profit probably more than doubled.
Hunan Zhuye Torch Metals Co, the publicly traded arm of the country's biggest zinc producer, jumped by the exchange-imposed 10% daily limit.
“The market still believes the growth story of commodity stocks,'' said Sun Chao, an analyst with Citic Securities Co here. “The fundamentals are strong. Rising demand leads to higher metal prices.''
The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, rose by 3.23 points, or 0.2%, to 1342.96 at the 3pm local time close, after falling as much as 0.7%. It was the highest close since Nov 26, 2004.
The Shenzhen Composite Index, which tracks the smaller market, added 1.88 points, or 0.6%, to 339.49, a level not seen since Dec 9, 2004.
Hunan Zhuye Torch jumped 0.55 yuan to 6.04, extending its gain to 44% this week. Shenzhen Zhongjin Lingnan Nonfemet Co, China's third largest zinc producer, rose 0.35 yuan, or 2.4%, to 15.19.
Yunnan Chihong, a zinc producer in the southern province of Yunnan, said its first-quarter profit probably rose as much as 150% from a year earlier. Its shares last traded on Feb 24 before a trading suspension, as the company seeks to dispose of its non-tradable shares.
Zinc rose to a record in London on Thursday.
Industry leaders said in Santiago, Chile, on Thursday that China's huge appetite for copper to serve its construction, power and motor vehicle industries was expected to continue into the foreseeable future and drive prices even higher.
China consumes 22% of the world's copper but mines only 5% of copper ore. It accounted for 95% of the growth in the world market since 2000 and helped propel copper prices to record levels this week.
“China is a significant player in world consumption but is far behind in terms of resources,” said Tom Albanese, head of copper and exploration at Rio Tinto Ltd/Plc, the world's No. 2 miner. “This state of affairs probably won't change.”
Growing demand from China, India and other emerging countries, combined with supply disruptions at leading producers and tight stocks, helped push copper prices for three months delivery to a record US$5,798 a tonne on the London Metals Exchange (LME) on Thursday.
“China's electrification programme and information technology revolution are driving prices north of US$2.60 (a pound). The market will stay strong in the long term,” said Owen Hegarty, chief executive of Australian copper and gold miner Oxiana Ltd. – Agencies
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