Latest News
China data to trigger a raise in the copper price
Last Updated: 2017-08-09 08:17 | China Daily
 Save  Print   E-mail

Strong economic data and increased demand are driving up copper prices in China after they slumped by nearly 10 percent earlier this year.

The commodity came under pressure after it appeared that the United States President Donald Trump had put his $1 trillion infrastructure plans on the back burner until 2018.

But improved economic forecasts for China saw the copper price on Monday jump to 42,769 yuan ($6,365) per metric ton from the lowest point of 37,606 yuan in May.

"China has become the new engine for cooper growth," said Xu Ruoxu, an analyst from Shenwan Hongyuan Securities in Shanghai.

"The country accounts for 45 percent of global copper demand and has helped fuel increased prices after Trump appeared to put his infrastructure plans on hold," Xu added.

Copper prices are closely tied to China's economic prospects, a research report from Citibank stated.

The commodity is used heavily in the construction sector, and the electrical equipment industry, such as wiring and motors, as well as in smartphones, tablets and PCs.

"The International Monetary Fund adjusted its Chinese economic growth forecast back in April and this has helped drive a round of increases in the copper price," said You Yang, a broker based in Hong Kong.

The IMF raised its growth figures for the second biggest economy in the world by 0.1 percentage point this year and 0.2 percentage points in 2018.

Faster-than-expected GDP growth of 6.9 percent in China during the first six months has signaled that sustainable expansion will continue.

Key data from industrial production to fix investments have also been strong.

"The weakening dollar against the yuan has been a contributory factor for this round of increase in copper price," said Zhan Sheng, investment director of JZ Investment, a subsidiary of JZ Securities.

"A weaker currency means cheaper copper in dollar terms," Zhan added.

The dollar has fallen about 10 percent against the yuan since the start of the year, Bloomberg data showed last week.

Still, the development of new energy cars in China and surging sales in air conditioners have boosted demand for the commodity.

Industrial disputes in copper mines across the world have also played a role in the jump in prices, a research report from Huatai Securities in Beijing highlighted.

So far this year, there have been strikes and production problems in Chile, Indonesia and Peru, which could reduce output by 44,000 tons this year.

But not everyone is bullish about the commodity.

Zhan, of JZ Investment, believes copper prices will fall back to about $6,000 per ton in the second half of the year because of a slowdown in the construction and real estate sectors, where demand for copper is high.

Citibank, though, takes a different view. A report by one of the world's leading lenders forecasted that prices will surge to about $7,000 per ton by the end of the year due to plans to upgrade China's power grid and surging demand for electric cars and vehicles.

0
Share to 
Related Articles:
Most Popular
BACK TO TOP
Edition:
Chinese | BIG5 | Deutsch
Link:    
Xinhuanet | Chinadaily.com.cn | People's Daily Online | China.org.cn | CNTV | China.com | Global Times | Ecns.cn | China Youth International | Visit Beijing | Taiwan.cn
About CE.cn | About the Economic Daily | Contact us
Copyright 2003-2015 China Economic Net. All right reserved