Copper headed for its biggest monthly advance since January on fresh optimism over Chinese demand, though the metal erased morning gains as investors await more detailed policies from Beijing.
(Bloomberg) — Copper headed for its biggest monthly advance since January on fresh optimism over Chinese demand, though the metal erased morning gains as investors await more detailed policies from Beijing.
Beijing’s leadership has promised more support for the real estate sector and a reduction in the local-government debt burden, which are expected to boost the need for commodities in the top metals consumer. While authorities have stopped short of any “big-bang” stimulus, officials are set to hold a press briefing Monday afternoon to outline more measures to expand consumption.
Read More: China to Bolster Financial Support to Drive Consumption
The country’s official manufacturing purchasing managers’ index rose to 49.3 in July from 49 in June, beating the median estimate of 48.9 in a Bloomberg survey of economists. Still, a reading below 50 signals contraction from the previous month, showing the economy’s recovery remains under pressure.
Copper increased as much as 0.9% to $8,739.50 a ton on the London Metal Exchange, the highest level in about three months, before erasing gains to trade flat at $8,660.50 by 12:21 p.m. in Shanghai. It’s up 4.2% this month.
Prices of the metal may fluctuate as “investors are pricing in Chinese supporting policies and the US’s resilient economy and slowing tightening,” Jinrui Futures Co. analyst Li Li said. Further gains will hinge on the eventual implementation of China’s stimulus pledges and actual demand improvement, she said.
Meanwhile, iron ore steadied, with sentiment impacted by flooding in Hebei, a northern province that contains the steel hub of Tangshan, even as optimism remains than stimulus from Beijing will bolster demand.
Prices of the steelmaking material may be further dampened by steel curbs, Huatai Futures said in a note. Mill operations saw their steepest fall in more than a year, dragging rates to the lowest since August last year.
“The policy of flat control of crude steel output has been implemented,” Huatai Futures said.
Iron ore futures were little changed at $106.75 a ton in Singapore, after climbing 1.1% earlier in the day. Futures in Dalian fell 1%, while steel in Shanghai dipped.
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