Onome Amuge
Copper rebounded on Wednesday as traders positioned for the possibility of fresh stimulus measures in China, lifting the metal back toward record territory after a brief pullback in the previous session. Benchmark three-month copper on the London Metal Exchange rose 1.2 per cent to $11,626 a tonne in official open-outcry trading, recovering part of Tuesday’s 1.3 per cent decline and edging closer to Monday’s all-time high of $11,771.
The advance came as Chinese property stocks rallied sharply amid market speculation that Beijing is weighing a Rmb400 billion ($56.6bn) mortgage subsidy programme aimed at stabilising the country’s distressed real estate sector. Property construction is one of the largest sources of demand for copper and other industrial metals, making the sector pivotal for global pricing.
Dan Smith, managing director at Commodity Market Analytics, said expectations of targeted support were unsurprising given weak recent indicators. “A lot of the data from China was abysmal on construction, so it wouldn’t surprise me at all if there’s going to be more stimulus to keep that part of the economy going,” he said.
Analysts noted that stimulus for the broader economy may also be necessary after new data on Wednesday pointed to persistent deflationary pressures and weak domestic demand, raising the stakes for policymakers as they attempt to revive momentum in the world’s second-largest economy.
Copper has risen 32 per cent this year, driven by mounting concerns over mine disruptions and tightening ore supply, as well as constrained metal flows into regions outside the US. Those dynamics have stoked expectations of a looming deficit, helping to propel prices higher despite bouts of profit-taking. Smith said he remained constructive on the outlook and expects copper to “go up to $12,000 before the end of the year”.
In China, however, the most-traded copper contract on the Shanghai Futures Exchange ended daytime trading 0.2 per cent lower at Rmb91,850 a tonne, indicating domestic sentiment lagged the LME’s rebound as traders assessed the credibility and timing of potential government action.
Global metals markets were also keeping a close watch on the US Federal Reserve, which is widely expected to deliver an interest rate cut later on Wednesday. While easing would typically support commodities by lowering borrowing costs and boosting industrial activity, investors have scaled back expectations of a sustained cutting cycle. Analysts at Chinese broker Jinrui said caution over additional rate reductions has led some participants to pare back positions, even as supply constraints outside the US continue to keep prices elevated and volatile.
Elsewhere across the LME complex, aluminium rose 0.3 per cent to $2,865 a tonne, zinc gained 0.2 per cent to $3,097, and lead advanced 0.5 per cent to $1,987.50. Nickel was little changed at $14,735, while tin climbed 1.7 per cent to $40,550, extending its strong performance over recent sessions.
