Strong Chinese Economic Data Boosts Copper
By David Hodari and Amrith Ramkumar
Copper prices rose Wednesday after data showed China's economy expanded faster than expected in the first two months of 2018, helped by strong overseas demand for Chinese goods.
Copper for May delivery climbed 1.3% to $3.1785 a pound. Prices have fallen about 4% in 2018 coming off their best year since 2010, with some analysts concerned about an economic slowdown in China, the world's largest consumer of industrial metals.
However, Wednesday's data showed industrial production in China, a rough proxy for economic growth, expanded by 7.2% in January and February from a year earlier, well above the 6.2% pace in December and a 6.1% rise forecast by economists polled by The Wall Street Journal.
That data came after a weak manufacturing purchasing managers index reading on Feb. 27 hurt copper and other base metals.
Some investors expect demand to pick up as the year goes on, noting the Chinese Lunar New Year holiday disrupted manufacturing activity last month.
The Chinese data "signaled a more robust demand picture than many had assumed. [The fixed-asset investment] number in particular could encourage some renewed investment in the base, bulk sector," said Matt France, head of Asian institutional metals sales at Marex Spectron.
Analysts are also monitoring possible supply disruptions this year with several mining labor contracts up for renegotiation in Chile and Peru.
Meanwhile, investors were tracking moves in the dollar, as a weaker U.S. currency can make copper and other dollar-denominated commodities cheaper for overseas buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, was down less than 0.1%.
Among precious metals, gold for April delivery was down 0.2% at $1,323.90 a troy ounce. Some analysts expect prices to fall ahead of next week's Federal Reserve meeting, with the central bank seen raising interest rates. Gold struggles to compete with yield-bearing assets like Treasurys as borrowing costs rise and tends to fall before Fed rate increases then bounce back after the central bank meetings.