Copper bounces on prospects for support for Chinese property sector

LONDON: Copper prices rebounded on Wednesday, moving back towards record levels on hopes of more stimulus in top metals consumer China, especially for its battered property sector.

Benchmark three-month copper on the London Metal Exchange was up 0.7 percent at USD11,564 a metric ton by 1705 GMT after easing by 1.3 percent on Tuesday and having hit a record peak of USD11,771 a day earlier.

Shares in China’s property sector surged on Wednesday on market rumours that the government was planning a 400 billion yuan (USD56.63 billion) mortgage subsidy package.

The property sector is a major consumer of copper and other industrial metals.

“A lot of the data recently from China was all pretty 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,” said Dan Smith, managing director at Commodity Market Analytics.

Stimulus for the wider Chinese economy is also needed, analysts said after data on Wednesday showed that deflationary strains are persisting and domestic demand remains weak.

LME copper has surged 32 percent this year on worries about mine disruptions causing deficits and as flows of metal to the US tighten supply in the rest of the world.

“I still think the risk is on the upside for the time being. I’ve got a hunch we’re going to go up to USD12,000 before the end of the year,” Smith said.

The most traded copper contract on the Shanghai Futures Exchange closed daytime trading down 0.2 percent at 91,850 yuan a ton.

The market was also awaiting news from the US Federal Reserve. The central bank is widely expected to trim interest rates on Wednesday but it could also dampen expectations of further rate cuts.

Caution over future rate cuts has led investors to scale back positions, and expected supply strain outside the US is keeping prices elevated and volatile, analysts at Chinese broker Jinrui said in a note.

Among other metals, LME aluminium rose 0.4 percent to USD2,868 a ton, lead added 0.1 percent to USD1,979.50 and tin gained 0.3 percent to USD39,990 while zinc lost 0.3 percent to USD3,082 and nickel slipped 0.5 percent to USD14,665.