Copper prices saw a significant upswing, hitting a four-week peak on the back of renewed optimism in demand. The driving force behind this surge was none other than China, the world’s largest consumer of copper. The Chinese government unveiled measures to bolster its property market, coupled with promising data indicating expansion in the nation’s manufacturing sector.
China’s Measures and Manufacturing Expansion Fuel Optimism
As of 1100 GMT, copper on the London Metal Exchange (LME) experienced a 1.4% rise, reaching $8,545.5 per metric ton.
This surge signifies the highest point since August 7 and marks a notable 3.6% increase since August 17.
Optimism on China’s Demand
Experts like Natalie Scott-Gray from StoneX attribute this price rally to growing confidence in China’s demand for metals, indicating a potential turnaround. This optimism stems from surveys of purchasing managers in China’s manufacturing sector. Notably, the Purchasing Managers’ Index (PMI) for new orders entered expansionary territory for the first time since March 2023.
China’s Manufacturing Resurgence
China’s manufacturing sector pleasantly surprised by returning to expansion in August. Improvements were observed in supply, domestic demand, and employment.
These positive developments suggest that official efforts to stimulate economic growth might be bearing fruit.
Government Measures
China’s government introduced a slew of measures to revive its property market. These include reducing mortgage rates for first-time homebuyers and adjusting down payment ratios in select cities.
Anticipated Restocking
Furthermore, as September and October approach, the metals market anticipates a period of restocking. This typically accompanies the resumption of construction activities during cooler and drier months.
Lead Performance
In addition to copper, lead also performed robustly, reaching an eight-month high of $2,295 per ton, mainly due to speculative buying. Worries about supplies of this battery metal created a premium for the cash lead contract over the three-month contract.
Currency Impact
The weaker U.S. dollar, making dollar-priced commodities more attractive for holders of other currencies, played a significant role in supporting industrial metal prices.
In conclusion, the resurgence in copper prices reflects China’s rebound and support for its property market, instilling optimism in the metals market.