Industrial Metal: Copper Rises on China Demand Hopes
INDUSTRIAL METAL – Copper prices rose on Tuesday in Asian trading as copper rose to near two-week highs thanks to expectations that China’s demand for the commodity could be higher.
On the London Metal Exchange, benchmark copper was 1.1% higher, costing $5,937 per ton. This was its highest since May 29, coming right after its five-month low hit on June 7.
On the Shanghai Futures Exchange, copper contracts surged 1.5%, trading at 46,900 yuan (or $6,782.46) per ton, after touching 46,940 yuan earlier in the session. This was also its highest since May 29.
China’s Yangshan copper import premium has already reached as high as $59 per ton from 2019 lows at $47, which was reached in mid-May.
This indicates strong physical demand for the metal in the wake of falling stocks in warehouses in the country.
“Lower prices and recovery in Chinese physical premium should keep imports strong (in June),” said analysts.
According to data released on Monday, China’s unwrought copper imports dropped 10.9% from the previous month, reaching 361,000 tons in May. They were 23.2% lower from 470,000 tons in the same month last year.
“Yangshan’s spot premium dropped to the lowest level (this year) in May. Looking ahead, as the premium has started to recover, we expect China’s import appetite to recover again in June,” said a metals and mining analyst at Argonaut Securities.
Continuing Trade Dispute Pesters Industrial Metal
The broader financial markets have also been firmer. Investors managed to be bullish after China’s decision to ease financing rules to boost local government spending on public works.
Then, there’s also the anticipation of possible US interest rate cuts.
However, the threat of more disruptive impacts from the ongoing trade dispute between the US and China still looms large.
US President Donald Trump said on Monday that he was prepared to slap more tariffs on Chinese imports.
China, on the other hand, said that it was ready for more trade talks with Uncle Sam.
Trump said that he was anticipating a meeting with Chinese President Xi Jinping at the Group of 20 Summit in Japan later in the month.
China has not yet confirmed any meeting.
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