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What Made Copper Rise to 2-Month High Price Levels?

Val Kensington - Author
By

Aug. 18 2020, Updated 4:45 a.m. ET

Copper trading at 2-month highs

Copper gained for the third consecutive trading day amid decreased fears about the Brexit vote and increased hope for economic stimulus. At 1:35 PM EST on July 13, the COMEX copper futures contract for September delivery was trading at $2.24 per ounce—a gain of ~1.2%. The weaker dollar also supported copper prices on July 13.

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Increased hopes for economic stimulus

Copper started the day on a positive note amid increased hope for economic stimulus. The Brexit fears subsided and the market is expecting economic stimulus from major central banks around the world. This is supporting the sentiment around copper. Also, better-than-expected US economic data strengthened the sentiment and supported copper’s price rally this week. According to recent data released by the General Administration of Customs, China’s copper imports in June came in at 420,000 metric tons. Even though the imports declined for the third consecutive month after hitting peak levels in March, the imports in the first six months of 2016 stood at 2,740,000 metric tons—a surge of 22% compared to the same period the previous year.

Healthy copper imports were supported by investments in construction and the power sector. Healthy imports raised the hope for increased demand. China is the largest copper consumer—it accounts for more than 45% of the world’s copper consumption. Healthy demand from China ensures a promising outlook for copper. At 1:52 PM EST on July 13, major copper producers Freeport-McMoRan (FCX), Glencore (GLNCY), BHP Billiton (BHP), and Rio Tinto (RIO) gained ~0.39%, ~0.74%, ~0.1%, and ~0.66%, respectively. The SPDR S&P Metals & Mining ETF (XME) gained ~0.49%, while the PowerShares DB Base Metals (DBB) fell by ~3.8%.

In the next part, we’ll discuss how gold performed on July 13.

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