Copper hits more than 2-month high on US rate cut momentum, improving China demand

admin admin | 09-25 16:20

Copper prices have risen due to the recent U.S. interest rate cut and increased demand in China.
Copper prices rose on Tuesday on the continued momentum of the U.S. interest rate cut last week and improving demand in top consumer China, supported by stimulus and rising seasonal consumption.

Three-month copper on the London Metal Exchange was up 1.5% at USD 9,687 per metric ton by 0801 GMT, after hitting its highest since July 17 at USD 9,700 earlier in the session.

The most-traded October copper contract on the Shanghai Futures Exchange closed up 1.8% at 76,760 yuan ( USD 10,908.52) a ton. It hit 76,780 yuan, the highest since July 19, earlier in the session.

China's copper consumption is usually stronger between late September and December.

"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 home appliances and electric vehicles output, and increasing grid investment.

"(But) people are still not sure whether the peak season has come because copper price has bounced back recently," he added.

"SHFE inventory has been declining quite sharply. I expect copper demand and price to improve in the fourth quarter."

SHFE copper inventories were last at 164,938 tons, the lowest since Feb. 8.

China's central bank announced broad monetary stimulus and property market support measures on Tuesday. The country has provided supportive policies for home appliances and electric vehicles.

The U.S. Federal Reserve is expected to introduce more cuts over the next year after a 50-basis-point reduction last week. This could boost physical metals demand and weigh on the U.S. dollar, making greenback-priced metals cheaper to holders of other currencies.

LME aluminium increased 1.4% to USD 2,529.50 a ton, zinc rose 2% to USD 2,941.50, nickel edged up 0.8% at USD 16,675, lead advanced 0.9% to USD 2,076 and tin was 1% higher at USD 32,620.

SHFE aluminium rose 0.7% to 19,980 yuan a ton, nickel climbed 1.2% to 126,690 yuan, zinc increased 1.4% to 24,010 yuan, lead rose 1.5% to 16,655 yuan and tin advanced 0.8% to 261,260 yuan.

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