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Copper Prices Surge on China Economic Data, Fed Rate Hike

March 1, 2017 at 18:01 by Andrew Moran

Copper futures hit a one-week high after new economic data from China and movement at the US central bank fueled the industrial metal’s rise. With China’s surging domestic and export demand and the Federal Reserve‘s intentions to raise interest rates three times this year, copper prices continued their strong 2017.

May copper futures rose $0.02, or 0.74%, to $2.734 per pound at 16:35 on Wednesday on the New York Mercantile Exchange. Copper prices are trading at their highest levels since the end of February. The metal has had a great start to 2017 as it has jumped nearly 9% year-to-date.

New data released on Wednesday showed positive manufacturing data from China, which suggests the potential for growing demand. Chinese factory activity grew at a faster-than-normal pace in February, signaling that the global economy is finally gaining some momentum even in an era of trade protectionism.

Experts do contend that an uptick in domestic and export demand may lead to shortages of copper because of supply disruptions.

The US central bank has hinted that it is more certain that it will move ahead with a rate hike at the next Federal Open Market Committee (FOMC) meeting. Policymakers will sit down on March 14 and 15. If Fed Chair Janet Yellen does pull the trigger on a rate hike then it may mean strong US growth is expected.

US President Donald Trump was short on details during Tuesday’s speech to Congress when it came to his proposed $1 trillion infrastructure investment plan. Analysts say that more details could have helped copper prices climb even higher in the middle of the trading week. Late last year, copper prices had rallied to a 36-year high because of Trump’s plans to spend a lot of money on the nation’s infrastructure, which would require an immense amount of copper.

Reports have noted that copper demand may spike nearly 4% this year as more governments embrace infrastructure spending, particularly in the US, China, Canada, and the UK.

If you have any questions and comments on the commodities today, use the form below to reply.

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