LME copper prices, opening at $8520.5 per metric ton and closing at $8491.5 per metric ton last Friday, witnessed a positive trend. Similarly, MCX Copper recorded a gain of 0.59%, closing at 739.95, drawing enthusiastic responses from investors.
The cause of this market optimism can be attributed to Beijing’s initiatives aimed at bolstering the property market. Which includes reducing mortgage rates for first-time homebuyers and easing down payment requirements in specific cities.
Optimism in Copper Market Amid China’s Supportive Measures
What further fueled this upbeat sentiment was China’s favorable Purchasing Managers’ Index (PMI) data. In an unexpected turn of events, China’s factory activity, according to a recent private-sector survey, surged back into expansion mode in August.
This expansion was evident in the improvements across supply, domestic demand, and employment.
Beijing’s proactive measures to support the real estate sector and the promising PMI figures have garnered strong investor approval. Notably, copper’s fortunes are closely tied to the real estate market, given its extensive use in construction and infrastructure projects.
Beyond this, the growth of the electric vehicle (EV) market and the rapid expansion of India’s economy are poise to drive global copper demand.
India, in particular, is expect to witness a 40% increase in copper demand from 2022 levels, exceeding 1.5 million tons by 2025.
Moreover, real estate policies in various Chinese regions have led to an across-the-board increase in non-ferrous metals prices.
Meanwhile, in the United States, data from the Department of Labor indicates that initial jobless claims in August were lower than market expectations at 187,000. However, the unemployment rate climbed from 3.5% in July to 3.8% in August.
Despite the positive impact of China’s domestic policies on the markets. There remains speculation about a potential Federal Reserve rate hike, contributing to macroeconomic uncertainties.
These combined factors are influencing the dynamics of the copper and metals markets, creating an environment of cautious optimism.