Shanghai Copper Rises on Signs of Improving Demand in China
Shanghai copper prices increased by 2.08% on improving demand signals from China, primarily in power and construction sectors. Analysts note a decline in inventories due to lower imports, although concerns about a global trade war may curtail future price increases. Other base metals also showed moderate gains during this period.
On Wednesday, Shanghai copper prices rose significantly, reflecting improving demand in China, which is the largest consumer of the metal. The most-active copper contract on the Shanghai Futures Exchange (SHFE) closed with a 2.08% increase, reaching 79,410 yuan ($10,962.02) per metric ton. Earlier in the day, this contract peaked at 79,470 yuan, its highest value since September 30.
Analysts from ANZ indicated that the fundamentals for copper are strengthening, particularly in grid infrastructure and electric vehicles, with their Downstream Copper Demand Indicator showing positive growth. They noted that manufacturers, buoyed by recent stimulus measures, are increasing production and that copper cathode inventories in Shanghai and Guangdong continue to decline due to reduced imports.
Despite these positive signs, analysts from First Futures forecast a decline in China’s refined copper output in April as more smelters undergo equipment maintenance, with some reducing capacity utilization due to losses. State-backed research firm Antaike reported that copper cathode output rose by 5.28% year-on-year to 1.9 million tons in January-February, with expectations for March output to rise by 4.32% to 969,000 tons.
Global copper demand is heavily influenced by China, which consumes approximately half of the world’s supply. However, concerns regarding a potential global trade war are dampening price increases, according to ANZ analysts. Other base metals also experienced gains, with SHFE aluminium rising by 1.04% and zinc increasing by 0.67%. Meanwhile, three-month copper on the London Metal Exchange (LME) edged up by 0.5% to $9,727.5 a ton.
In conclusion, Shanghai copper has gained on optimistic signs of rising demand in China, particularly driven by infrastructure investments and electric vehicle production. While production is set to decline temporarily due to maintenance, overall demand remains strong, supported by economic stimulus measures. Nonetheless, global trade tensions pose risks to further price increases in the copper market.
Original Source: www.tradingview.com
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