Prices for copper and other base metals saw a rise in London on Tuesday following China’s commitment to bolster its economy and boost domestic demand. Three-month copper on the London Metal Exchange increased by 1.3% to reach $8,626 per metric ton during official open-outcry trading, touching its highest level since July 14 at $8,676.
China’s top leaders indicated on Monday that they would introduce more supportive policies for the property sector, which consumes a significant amount of metals. While specific details have yet to be released, the market received a positive signal that measures would continue to stabilize economic growth. The exclusion of the phrase “houses are for living, not for speculation,” which has been associated with Beijing’s property restrictions, may also help stabilize market sentiment. However, the actual impact of these policies on base metals demand may take some time to materialize.
In addition to China’s policy announcements, the market rebound was supported by computer-driven speculative funds using algorithms and short-covering of bearish positions.
Copper, widely used in power and construction, has experienced a 9% decline from its mid-January peaks, which were fueled by high expectations of a post-pandemic boom in China.
The strengthening of the yuan on Tuesday, based on China’s economic support promises, has made dollar-denominated metals more attractive for Chinese buyers.
Investors are now closely watching for rate decisions from the Federal Reserve and European Central Bank later in the week. A 25 basis point rate hike is expected from both central banks, but pricing diverges from policymakers’ rhetoric.
In the London Metal Exchange, aluminum advanced by 0.8% to reach $2,226 per metric ton during official activity. Zinc also increased by 1.6% to $2,455.5, tin rose by 0.3% to $28,675, and nickel saw a 0.7% rise to $21,575. Lead, however, fell by 0.8% to $2,157.
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