LONDON: Copper prices gained on Thursday on a weaker dollar and after a new injection of stimulus in China that could fuel infrastructure projects and boost demand.
Three-month copper on the London Metal Exchange rose 1.2% to $8,130 a tonne by 1600 GMT, reversing the previous session’s 1.1% loss.
US Comex futures advanced 1.3% to $3.69 a lb.
Copper has rebounded by 17% since touching 20-month lows on July 15, but is still down 25% from a record peak hit in March.
To boost its economy, China has added 19 new policies on top of existing measures, including raising the quota on policy financing tools by 300 billion yuan ($43.69 billion).
“Some people have been worrying about the lack of infrastructure growth in addition to property market weakness, so that certainly provides some necessary help,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.
“In terms of scale it’s not comparable to what we saw in 2009, it’s more targeted, but nevertheless it’s still helpful. At the moment they don’t want to have a big bazooka.” China will focus on expanding jobs and promoting fiscal, monetary and industrial policies to support job market stabilisation, a Chinese official said on Thursday.
China’s energy shortages highlight the need for more investment in the power grid, leading to a pick-up in demand for copper and aluminium, ANZ said in a note.
The bank boosted demand growth estimates for copper in China this year to 3.6% from 2.2%. “We see the markets of both metals going into deficit next year.” Also supporting the market was a weaker dollar index, which makes commodities priced in the US currency cheaper for buyers using other currencies.
Slovenia’s Talum has cut production of primary aluminium to around 20% of its smelter capacity, a spokesperson said, joining other European firms forced to reduce output by sky-high energy costs.
LME aluminium rose 0.1% to $2,433.50 a tonne, zinc climbed 1.2% to $3,555, lead edged up 0.1% to $1,975.50, nickel advanced 1.6% to $21,685 and tin added 0.6% to $24,430.
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