LONDON: Copper prices surged to their strongest levels in 10 weeks on Tuesday after top metals consumer China unleashed wide-ranging stimulus measures to boost its flagging economy.
Three-month copper on the London Metal Exchange climbed by 1.9% to $9,733 a metric ton in official open-outcry trading after hitting its highest since July 16 at $9,770.
China’s central bank announced its biggest stimulus since the pandemic to pull the economy out of its deflationary funk, but analysts warned that more fiscal help was needed.
“The market’s been looking for some kind of action and this is fairly aggressive,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“But I’m not sure if it’s a bazooka big enough to give the market momentum for an aggressive rally. Chinese consumers need to feel comfortable enough to spend some of their earnings and savings instead of putting it under the mattress or buying gold.” The next major resistance for LME copper was at $9,900 to $10,000, Hansen added.
The most traded October copper contract on the Shanghai Futures Exchange closed 1.8% up at 76,760 yuan ($10,908.52) a ton after touching the highest level since July 19. Also supporting the market were signs of firmer metals demand in the world’s second-largest economy.
“Demand in the past several weeks has been good. Wire rod production in September was quite good because the price was low,” said CRU analyst He Tianyu, pointing to strong output of home appliances and electric vehicles as well as increasing grid investment. Copper consumption in China is usually stronger between late September and December.
SHFE copper inventories have halved since early June to 164,938 tons, their lowest since Feb. 8. In other metals, LME aluminium gained 2.6% to $2,558 a ton, zinc jumped 3.2% to $2,978 after touching its strongest since July 11, nickel rose 0.8% to $16,670, lead was up 1.6% at $2,090 and tin added 0.6% to $32,500.
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