LONDON: Copper prices rose to their strongest in 11 weeks on Thursday, propelled by hopes of firmer metals demand after China announced fiscal stimulus measures following an easing of monetary policy to boost its sluggish economy.
Three-month copper on the London Metal Exchange (LME) climbed 1.4% to $9,950 per metric ton by 1030 GMT, the highest since July 9.
Chinese leaders on Thursday vowed to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%, after the country’s central bank on Tuesday unveiled its biggest stimulus since the pandemic, including cuts to key interest rates.
Sources told Reuters the new plans included issuing special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year.
“Yesterday some people were unsure whether fiscal stimulus would follow the monetary easing, but it did today so it’s all very positive in terms of supportive measures in China,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International in London.
“After the Fed rate cut, China has more room to unleash their supportive policies because the RMB (renminbi) has been quite strong.”
Copper retreats after touching 10-week high
Ahead of the U.S. interest rate cut last week, Chinese authorities were worried stimulus measures would undermine their currency.
The positive sentiment is likely to push copper towards its record high of over $11,100 touched in May, but at that point investors may examine how much the stimulus measures have fed through to stronger physical demand, Fu said.
The most-traded November copper contract on the Shanghai Futures Exchange (SHFE) closed up 0.4% at 77,740 yuan ($11,072.18) a ton.
Earlier in the session, copper prices fell on profit-taking on both bourses.
Disappointing data from China this year has raised concerns of a prolonged structural slowdown, especially in the property sector, which consumes a vast amount of metals.
“The market rallied really quick. There needs to be short-term pullback and consolidation. But in the longer term, it will rise again. The China story is positive,” a trader said.
LME aluminium rose 1.6% to $2,578 a ton, nickel added 0.1% to $16,815, lead climbed 2.1% to $2,139.50, zinc advanced 2% to $3,058, while tin
traded 0.9% higher at $32,375.
Source: Brecorder
