Tuesday, October 3, 2023

Copper rises after Chinese measures to support the real estate market

Copper prices rose on Tuesday on a weaker dollar and as funds trimmed their bearish bets after China, the world’s biggest consumer of industrial metals, took steps to boost its troubled property and stock markets.

* Benchmark copper on the London Metal Exchange (LME) rose 1.2% to $8,453 per tonne at 1611 GMT. The red metal extended gains after the dollar index fell on reports that US job vacancies fell in July.

* A weaker US currency makes dollar-denominated commodities cheaper for holders of other currencies, which could boost demand, while a stronger dollar could dampen it. This relationship is used by funds to generate buy and sell signals from numerical trading models.

* Previously, copper received support from China, which halved stamp duty on trading while the country’s stock markets cut margin requirements. For its part, the People’s Bank of China announced a series of policies to relax home loan rules to boost loan applications and home purchases.

“These moves are fueling risk appetite,” said Marex’s Alastair Munro, citing cuts in short copper positions by commodity trading advisers. “Data risk comes from China’s PMI and US Nonfarm Payrolls,” he added.

* Markets await the release of the Purchasing Managers Surveys (PMIs) for China’s manufacturing sector, a key driver of demand for base metals, to be released on Thursday and Friday. Expectations point to a fifth month of contraction.

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* In the United States, data on gross domestic product, inflation, and nonfarm payrolls due this week should provide clues to US interest rates and the direction of the dollar.

* Among other base metals, zinc hit a two-week high of $2,448 per tonne and ended up 2.6% at $2,444; Aluminum was up 1% at $2,172; lead rose 1.3% to $2,190; Tin fell 0.3% to $25,420; and nickel fell 0.5% to $20,685.

* To view base metal futures prices:







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