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Copper Edges Up As China Restocks Industrial Metal in COVID-19 Aftermath

March 10, 2020 at 17:42 by Andrew Moran

Copper futures are trading higher on Tuesday as new data suggests that China is restocking its inventories of the industrial metal. The red metal is also benefiting on forecasts that show a bullish sentiment for prices toward the end of 2020. With central banks cutting interest rates and federal governments instituting stimulus measures, could copper be the breakout metal?

April copper futures rose $0.01, or 0.41%, to $2.5205 per pound at 17:22 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Copper prices have slumped more than 3% over the last week, adding to their year-to-date losses of nearly 10%.

According to the General Administration of Customs, China’s copper imports climbed 7.2% year-on-year in the first two months of 2020. China, which is the world’s largest consumer of the red metal, saw its imports of unwrought copper total 846,107 tons in the January-February period. This is up from 527,000 tons in December and 789,358 tons at the same time a year ago.

Because the rise in imports coincided with Chinese business, construction, and factory activity grinding to a halt due to Covid-19, copper stockpiles in Shanghai Futures Exchanged-registered warehouses surged to a four-year high. With the economy gradually returning to normal and the coronavirus subsiding in China, the country is looking to make up for lost time, which could mean massive public-work projects.

In Chile, copper exports tumbled 2.2% in February to a three-year low of $2.48 billion. In total, the Latin American nation’s trade balance came in at $821 million last month with exports falling 6.6% and imports plunging 18.1%.

In other industry news, research organization Fitch Solutions modified its 2020 copper price forecast upward from $5,700 per ton to $5,900 tons. It further noted that the refined copper market most likely witnessed a production balance deficit of 62,700 tons last year due to sluggish Chinese consumption growth from 5.6% in 2018 to 0.5% in 2019. However, Fitch does anticipate the global copper market to return to a deficit next year with consumption growth recovering.

In other metal markets, April gold futures plunged $20.20, or 1.205%, to $1,655.50 per ounce. May silver futures slipped $0.14, or 0.82%, to $16.915 an ounce. April platinum futures picked up $8.70, or 1.01%, to $871.50 per ounce. April palladium futures crashed $86.70, or 3.6%, to $2,319.00 an ounce.

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