Prices of copper and other metals in London began the week higher on Monday, following data showing growth in China’s service sector activity. The prospect of deeper interest rate cuts by the United States also influenced market sentiment.
Three-month copper on the London Metal Exchange (LME) increased by 1.2% to $9,165.50 per metric ton by 0419 GMT, while the most-traded September copper contract on the Shanghai Futures Exchange (SHFE) slid by 0.6% to 73,530 yuan ($10,292.12) per ton.
Growth in China’s services activity accelerated in July, helped by new orders, though overseas demand slowed to its weakest pace in 11 months, according to a private-sector survey. This data provided some optimism amidst a slew of troubling reports from the previous week that showed weak manufacturing activities in China and slow job growth in the U.S.
The U.S. job report released on Friday also bolstered expectations of deeper interest rate cuts by the Federal Reserve starting from September. This could enhance industrial activities and boost metals demand.
Supporting prices further were increased buying activities after previous sell-offs. Despite bullish factors such as strong China demand and reduced smelter output having faded, investors still buy on the dip due to long-term optimism towards copper, according to traders.
LME copper had lost 8% over the past four weeks. Analysts at ANZ expect metal prices to bottom out soon, as current prices could trigger a supply response.
However, analysts at Guangzhou Futures noted limited room for price growth given recession fears looming over the U.S. economy.
In other metals, LME aluminium increased by 0.8% to $2,282 per ton, zinc rose by 1.4% to $2,689, tin went up by 1.5% to $30,645, and nickel grew by 0.8% to $16,410. On the SHFE, aluminium fell by 0.8% to 19,055 yuan per ton, zinc decreased by 1.1% to 22,620 yuan, tin increased by 0.9% to 250,480 yuan, and nickel edged up by 0.2% to 130,650 yuan.
While copper and other metals saw a price increase driven by optimism over China’s service sector growth and potential U.S. interest rate cuts, there remains caution due to weak overseas demand and recession fears in the U.S.
Jubilee Metals Group plc (LON:JLP) is a diversified metal recovery business with a world-class portfolio of projects in South Africa and Zambia. The Company’s expanding multi-project portfolio across South Africa and Zambia provides exposure to a broad commodity basket including Platinum Group Metals, chrome, lead, zinc, vanadium, copper and cobalt.
