Economic bellwether copper gains on demand hopes, sliding inventories

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Economic bellwether copper gains on demand hopes, sliding inventories

On Wednesday, copper futures’ prices registered broad-based gains across the board alongside other industrial metals as market participants remained Panglossian over a stronger economic growth despite debarkations of a flurry of odds, while a sharply weakening American Dollar alongside a sweeping plunge in copper stockpiles had boosted investors’ morale.

In point of fact, Wednesday’s gain of the copper futures’ prices were almost entirely galvanized a growing optimism over China demands following reveal of headlines that the world’s second-largest economy’s factory activity had expanded at its fastest pace in a decade in July, while American Dollar-denominated metals including copper futures became cheaper amid an abruptly softening US Dollar, eventually stoking demands for a number of industrial metals.

Declining inventories, narrowing premiums step up copper futures’ prices

On top of that, apart from a growing China demand which has brought investors’ appetite back for the industrial metals, declining copper inventories in the London Metal Exchange-registered warehouses had spurred up the buying bonanza further, while LME-registered three-month copper futures’ stocks have been at their lowest level since mid-January.

Besides, a narrowing of premiums for three-month copper had bolstered investors’ belief that the outflow of copper from the LME warehouses might come to an end sooner-than-anticipated, eventually pushing traders to hoard the economic bellwether alongside other industrial metals.

Citing statistics, as copper stocks were plunged more than 50 per cent compared to May this year, the benchmark copper futures in the London Metal Exchange had wrapped up the day 0.6 per cent higher to $6,490 a ton, just shy of its two-year peak of $6,633 per ton reached on mid-July.

Among other industry-grade metals, zinc futures surged 2.0 per cent to $2,387 per ton and lead gained 1.9 per cent to $1,917 a ton, while tin soared 0.8 per cent to $17,915 per ton and Nickel jumped 2.1 per cent to round off the day at $14,415 a ton.

Meanwhile, adding that the day’s gains of the industry-grade metals including copper were largely catapulted by a soaring China demand, a Quantitative Commodity Research analyst Peter Fertig said on Wednesday’s London Metal Exchange closure, “Chinese demand looks strong, but we also need to see an improvement in the rest of the world.

Political tension between the United States and China is a risk factor, however, the money pumped into the financial system by central banks and fiscal stimulus packages from governments mean a recovery.