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Copper prices have climbed to their highest in a month, driven by China's recent monetary policy shifts and growth strategies, lifting market optimism.
What does this mean?
Copper, essential for power and construction, saw London Metal Exchange prices rise to $9,293.5 per metric ton, nearing a peak of $9,314, reflecting renewed optimism. Similarly, China's Shanghai Futures Exchange observed a 0.5% increase in the most-traded January copper contract, reaching 75,760 yuan ($10,456.87) per ton. This boost is largely due to China's shift toward more accommodative monetary policy and fiscal measures, marking its first major policy adjustment in 14 years aimed at revitalizing economic growth. Despite the optimistic outlook, experts warn these policy changes typically take two to three quarters to show effects, indicating significant improvements may not emerge until late 2025. Meanwhile, China's Central Economic Work Conference remains a focal point for potential further stimulus measures in the coming year.
Beyond copper, other metals shared in the positive momentum. On the London Metal Exchange, aluminum and nickel experienced gains, priced at $2,619.5 and $15,760 per ton, respectively. Zinc, lead, and tin also rose, with tin reaching $29,840 per ton. On the Shanghai Futures Exchange, aluminum climbed to 20,400 yuan per ton, although nickel dipped to 125,340 yuan. These movements highlight a broader positive sentiment in the metals market correlating with China's policy announcements.
The bigger picture: China's stimulus strategies could reshape global demand.
China's economic policy adjustments underscore its vital role in shaping global market dynamics. As the world's largest consumer of copper, the country's commitment to 'appropriately loose' monetary and fiscal policies could stimulate demand across multiple sectors, notably construction and power. While immediate impacts may be limited, the anticipated ripple effects could stabilize markets and influence global supply chains well into 2025. Investors and policymakers are keenly watching the upcoming Central Economic Work Conference for further clarity on China's long-term economic targets and potential impacts.