COM - Copper bounces as China's deflation data prompts hopes for government stimulus

2023-08-09 08:52:56 ET

Copper prices rebounded from a nearly one-month low Wednesday following data showing China's economy fell into deflation, sparking hopes for more stimulus in the world's top metals consumer.

According to Reuters, three-month copper ( HG1:COM ) on the London Metal Exchange recently traded +1% at $8,431/metric ton, after hitting the lowest since July 7 on Tuesday.

The most-traded September copper contract on the Shanghai Futures Exchange closed -0.4% at 68,600 yuan/metric ton ($9,517.20).

ETFs: ( NYSEARCA: CPER ), ( COPX ), ( JJC ), ( JJCTF )

Potentially relevant stock tickers include ( FCX ), ( SCCO ), ( BHP ), ( RIO ), ( TECK ), ( HBM ), ( ERO ), ( OTCPK:CSCCF )

China's consumer prices fell 0.3% in July compared with a year earlier, and prices charged at the factory gate fell 4.4% in July from a year ago, raising pressure on the government to boost stimulus measures.

But the market is wary after prices rallied several times in recent months and were disappointed with modest stimulus measures, according to Saxo Bank strategist Ole Hansen.

Also supporting industrial metals was a retreat in the dollar index on improved risk sentiment and dollar selling by some Chinese banks.

The premium of the LME cash zinc contract ( LMZSDS03:COM ) over the three-month contract has surged to $30.25/ton, the strongest since late April, after rising from a discount of $20.25 in mid-July, indicating nearby supply tightness.

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