Copper recouped some of Monday’s losses in a mixed market after China pledged more support to help revive an economy that’s been imperiled by an escalating virus outbreak.
Copper rose as much as 2.3 per cent before paring gains as China’s central bank vowed to increase monetary support to the real economy, especially for industries and small businesses hit hard by the pandemic, according to a statement on Tuesday. That follows the People’s Bank of China’s decision Monday to cut the amount of money that banks need to have in reserve for their foreign currency holdings, an attempt to help limit the drop in the yuan.
Strict lockdowns are wreaking havoc on consumer spending and snarling supply chains in the world’s second-largest economy, putting its growth target for gross domestic product of about 5.5 per cent this year under increasing pressure. Chinese authorities have already taken some steps to stem the economic damage, including accelerating government borrowing and spending to boost infrastructure investment.
“Policy may be the salvation for China’s iron ore and base metal demand this year,” Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, wrote in a note. “Policymakers are hoping for a soft landing, helping stabilize commodity demand in the property construction sector,” while infrastructure investment in the country is also expected to rise significantly this year, he added.
Still, virus concerns persist as flareups intensified this week, along with looming interest-rate hikes by western governments. Most of Beijing is being tested, fanning fears of an unprecedented lockdown in the capital city. Baotou city, in the northern province of Inner Mongolia, where the country’s largest rare earth resources are located, sealed downtown residential compounds and ordered work be halted at most companies.
Aluminum slipped 0.4 per cent after gaining 2.3 per cent. Analysts at BloombergNEF forecast that the strengthening of aluminum trade between China and Russia, as well as continued sanctions on Russia could spur investments and increase production in the U.S. Nickel rose 0.9 per cent. More automakers will call for sustainable nickel mining in the wake of Russia’s war in Ukraine, the BNEF report says.
Copper rose 0.8 per cent to US$9,846 a ton on the London Metal Exchange as of 4:49 p.m. local time, after slumping 3.4 per cent on Monday. Zinc gained 1 per cent, while tin climbed 2 per cent.
Most base metals rebound as China steps up support for economy - BNN
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