Copper rallied back above $10,000/t to a three-month high after Beijing called for more measures to support its property sector, crucial for metals demand, and vowed to reach the country’s annual economic goals. Meanwhile, iron ore broke above $100/t.
On Thursday, the official Xinhua News Agency reported that China’s Politburo will push for the real estate market “to stop declining” and called for “forceful” rate cuts. This followed a raft of stimulus measures earlier in the week to boost its flagging economy.
China has been a drag on metals’ demand for over two years. A broad economic slowdown and, in particular, the crisis in the property sector has seen copper and other industrial metals prices slump.
We have seen plenty of property support measures this year, but they have so far been insufficient to have a meaningful impact on industrial metals demand.
Our China economist believes that for the property market to recover, two things need to happen. First, we need to see prices at least stabilise. Second, we need to see excess housing inventories come down toward historical norms. Until then, the drag on growth will continue. https://think.ing.com/snaps/pboc-unveiled-a-monetary-policy-easing-package-in-bid-to-support-growth/
We believe the continued weakness in the sector remains the main downside risk to our outlook for industrial metals. We believe that until the market sees signs of a sustainable recovery and economic growth in China, we will struggle to see a long-term move higher for industrial metals.
Spot gold prices reached fresh record highs, while silver prices jumped to the highest since 2012 on optimism over further interest rate cuts in the US. Gold prices are nearly up 30%, while silver prices gained almost 35% since the start of the year. The upward rally in silver prices is also supported by the possibility of increased industrial use along with the surging demand from the renewable energy sector. Several policymakers in the US Federal Reserve have shown their support for making additional (potentially large) interest-rate cuts, boosting the upward rally in the precious metals further.
Recent LME data shows that total inventories for nickel increased by 5,676 tonnes – the biggest intra-day addition since 14 April 2021- to 130,080 tonnes yesterday, the highest since 12 November 2021. The majority of the inflows were reported from warehouses in Rotterdam. On-warrant inventories for nickel rose by 5,556 tonnes for a second consecutive session to 121,362 tonnes, while cancelled warrants increased slightly by 120 tonnes to 8,718 tonnes as of yesterday.