Copper surged towards a weekly gain, underpinned by reports of fresh stimulus measures by top producer China, restoring investors’ confidence of a boost in demand amid declining inventories.
Three-month copper on the London Metal Exchange (LME) was up 0.6 percent to $8,177 a tonne, gaining 1.2 percent for the week.
The most-traded September copper contract on the Shanghai Futures Exchange (ShFE) also traded 1.7 percent to 63,480 yuan or $9,260.66 a tonne.
Meanwhile, stocks of copper in LME registered warehouses plunged 1,150 tonnes to their lowest level since June 24 to stand at 122,125 tonnes, reflecting low inventories and prospects of higher valuation in the short term.
According to market data, the red metal has rebounded by 17 percent since touching 20-month lows on July 15, but is still down 25 percent from a record peak it reached in March.
He Tianyu, a copper demand analyst at CRU Group, in his remark, said the new stimulus policies announced by China and the new infrastructure projects that will be coming into the market are expected to boost copper demand. Tianyu added that the tight supply in the market and very low inventory are major factors for copper’s rebound.
The Chinese government, during the week, announced that it will add 19 new policies on top of the existing steps unveiled in May, including raising the quota on policy financing tools by 300 billion yuan to support its COVID-hit economy. Recent economic data from the United States and Germany also lifted prospects for better demand outlook for copper and other base metals.
Peru, the world’s second highest copper producer after Chile, said it expects the price of the red metal to fall to $3.40 per pound in 2023 from an average of $3.90 this year as it plans for higher production to offset the fall in tax revenue.
Other base metals on the LME were mixed as aluminium shed 0.2 percent to $2,429 a tonne, zinc was up 0.9 percent to $3,579.50 a tonne, lead slipped 0.7 percent to $1,963 a tonne, while tin climbed 0.4 percent to $24,400 a tonne.
In the Shanghai market, aluminium was down 0.6 percent, zinc gained 1.7 percent, nickel was up 1.6 percent, lead fell 0.7 percent, and tin lost 0.5 percent.
