LONDON: Prices for copper and most base metals rose in London on Tuesday after top consumer China pledged to step up policy support for the economy, focusing on boosting domestic demand.
Three-month copper on the London Metal Exchange was up 1.3% to $8,626 per metric ton in official open-outcry trading, after touching $8,676, its highest since July 14.
China’s top leaders on Monday signalled there would be more supportive policies to come for the property sector that consumes a vast amount of metals.
“Although details are yet to be released and it is not like the big bazooka that some were hoping for, but one clear signal is that supportive measures will keep coming to stabilise growth,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.
“The omission of ‘houses are for living, not for speculation’ is likely to help to stabilise market sentiment. Nevertheless, how effective the actual policies are on base metals demand could still take some time to feed through,” she said, referring to an oft-repeated phrase linked to Beijing’s property restrictions.
The rebound in the market was also supported by computer-driven speculative funds that use algorithms and short-covering of bearish positions, a trader said.
Copper, used in power and construction, is still down 9% from mid-January peaks achieved during a short-lived period of bright expectations for a post-pandemic boom in China.
The yuan also bounced on Tuesday on China’s promises to step up economy support, making dollar-denominated metals more attractive for Chinese buyers.
The markets are awaiting rate decisions from the Federal Reserve and European Central Bank later this week and anticipate 25 basis point rate hikes from both the central banks, but beyond that pricing diverges from policymakers’ rhetoric.
LME aluminium advanced 0.8% to $2,226 per metric ton in official activity, zinc increased 1.6% to $2,455.5, tin was up 0.3% at $28,675 and nickel rose 0.7% to $21,575. Lead fell 0.8% to $2,157.
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