By Will Horner

Copper prices, often seen as a proxy for global economic growth, are hovering near their highest level in 28 months amid mine closures and strong Chinese demand.

Three-month copper futures on the London Metal Exchange, the international benchmark, were trading at $6,910 a ton on Thursday. The industrial metal had hit an intraday high of $7,034 on Wednesday.

The metal, which has countless industrial applications, has seen a strong rally this year as the coronavirus pandemic closed mines even while demand remained resilient. Copper prices are up 46% from their lowest point in March.

China, which consumes around half of the world's copper but only mines about 16% of it, has been importing large quantities of the metal as its factories have restarted activity at a strong clip. The nation is also seeking to decarbonize its economy, which is expected to further support demand.

Chinese President Xi Jinping pledged last month to make his country carbon neutral by 2060, raising expectations that the country's next Five Year Plan will be heavy on green technology and infrastructure spending -- both moves that could supercharge its copper demand. A blueprint of the plan is expected to be unveiled at a meeting of the Chinese Communist Party next week.

A catalyst for Chinese traders has been a strong rally in the Chinese yuan, said Ole Hansen, head of commodity strategy at Saxo Bank. With copper bought and sold on global markets in dollars, a weaker dollar boosts the buying power of holders of other currencies.

The onshore yuan closed at a more than two-year high of 6.65 against the dollar on Wednesday, providing an ideal time for Chinese speculators to buy up the metal in anticipation of growing demand.

"Don't discount the speculative interest that commodities attract in China," said Mr. Hansen. "It is much more a case of expected future demand rather than actual demand.

The market is also concerned that China will use its meeting next week to lay plans to build strategic stockpiles of copper, to safeguard its access to a metal that is crucial for its economic growth.

"Inventories are already critically low across the world," said Daniel Ghali, commodities strategist at TD Securities. "If China starts building copper stockpiles, that is going to withdraw a significant amount from the market and as such, we should expect a supply risk premium to be built into the price."

Chinese imports of copper have risen sharply in the last four months, it imported 62% more last month than in September 2019, according to data from China's General Administration of Customs.

With a large chunk of the world's supply concentrated in Chile, strikes among mine workers there in recent days have also boosted prices.

The Candelaria mine in Chile, owned by Canada's Lundin Mining, was forced to shutter operations this week amid a strike that has lasted for over two weeks. Workers at Chile's state-run Codelco, the world's largest copper producer, have also taken to the street this week to protest layoffs.

The copper market is also watching the U.S. presidential race, with expectations that a win for former vice president Joe Biden would further boost demand, thanks to his $2 trillion infrastructure stimulus plans which includes upgrading the electrical grid and rolling out electric vehicle charging stations.

"Copper will continue to be at the forefront of the need to expand the electricity grid," Mr. Hansen said. "If we are all going to be driving around in electric vehicles we need to be able to charge them everywhere we go."

Write to Will Horner at William.Horner@wsj.com

(END) Dow Jones Newswires

10-22-20 0943ET