Better economic data from China
On Wednesday, November 4, 2015, copper prices were supported by better economic data from China and production cuts from miners.
The China Caixin Services PMI (Purchasing Managers’ Index) October data showed that the service sector in China grew at its fastest pace since July 2015. The October reading was 52, which shows a significant increase from its September value of 50.5. Since 45% of the world’s copper demand comes from China, data supporting the Chinese economy gave a boost to copper prices on November 4.
Additional production cuts from Glencore
Copper rose to a one-week high because of additional copper production cuts by Glencore (GLEN). This commodity trading and mining giant announced an additional 55,000 metric tons of copper production cuts by the end of 2017. Glencore announced these additional production cuts in order to reduce debt and improve its balance sheet.
In September, Glencore (GLEN) declared plans to close its Zambia and Katanga mines in the Congo for one and half years. These copper production cuts would reduce Glencore’s copper production by 400,000 metric tons. With these latest cuts, Glencore will be removing a total of 455,000 metric tons of copper from the global metals market.
Since September, many other major mining companies such as Freeport-McMoRan (FCX) and Anglo American (AAUKY) declared production cuts due to disappointing copper prices. Falling commodity prices are due to the economic slowdown in the world’s second largest economy, China, and an oversupply of metals situation in the global markets. To know about copper production cuts by major mining companies, you can read Market Realist’s article Miners Are Cutting Production to Cope with Low Copper Prices.