SUPERNEWS

Macro

Copper Hits $10K/Ton Amid China Factory Surge, Up 15% in April

Copper hits two-year high at $10,164 a ton, rallying 15% in April amid China's manufacturing growth and economic optimism.

By Bill Bullington

ᐧ

4/30, 04:25 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
article-main-img

Key Takeaway

  • Copper rallies above $10,000 a ton, marking its biggest monthly increase in over two years due to optimistic Chinese factory data.
  • A 15% surge in April driven by a historic supply squeeze and booming demand from green industries.
  • Potential easing of home purchase restrictions in China could further boost demand, despite current high prices deterring immediate buying.

Copper Rally Amid China's Economic Rebound

Copper prices have soared to a two-year high, reaching $10,208 a ton before settling at $10,164 on the London Metal Exchange. This marks a significant 15% increase during April, driven by a historic squeeze in the supply of mined ore and an anticipated surge in demand from green industries. The rally is further supported by fresh Chinese factory data, with the official manufacturing purchasing manager index (PMI) hitting 50.4 in April, indicating sustained economic recovery in the world's top metals-consuming nation.

China's Manufacturing and Services Expansion

The April manufacturing PMI of 50.4, slightly above expectations, and a non-manufacturing PMI of 51.2, although below forecasts, collectively signal a modest but continuing economic expansion in China. This data comes amid a backdrop of improving factory activity and services sector performance, suggesting resilience in the Chinese economy despite challenges. Raymond Yeung, chief economist for Greater China at ANZ, highlighted the export-driven nature of this improvement, pointing to robust Western economies and solid domestic consumption.

Market Optimism and Policy Anticipation

The positive economic indicators have propelled the Hang Seng Index into a bull market, with a 20% rise since January. This surge reflects growing investor confidence, buoyed by regulatory measures, improving fundamentals, and optimism in the property and technology sectors. Investors are now keenly awaiting the outcomes of a Politburo meeting expected to introduce growth-stimulating policies, particularly for the embattled property sector, which is a crucial demand driver for industrial metals.

Street Views

  • Chaos Ternary Research Institute (Bullish on the copper market):

    "Investors are also preparing for Chinese regulators to ease home purchase restrictions in major cities. The move may be announced at a Politburo meeting this week, and would further aid the country’s embattled property sector, a key pillar for industrial metals demand."