Data
showing a stronger-than-expected increase in financing last
month triggered a jump in Chinese equities and prompted
speculation that the sell-off in metals was excessive.
Copper rebounded in base metals after slumping to the lowest in more than five years.
The metal rallied on Thursday after sliding yesterday to the weakest since July 2009 amid speculation China’s copper demand growth is slowing.
China accounts for 45 percent of global copper demand, compared with 8 percent for the U.S., Morgan Stanley estimates. Demand growth in the Asian nation will slow to 4 percent in 2015 from 5.5 percent last year, according to estimates by CRU Group, a research company. The pace averaged more than 10 percent between 2002 and 2012, according to CRU.
On the Bloomberg Commodity Index copper is the worst performing non-energy raw material this
year, which has tumbled to the
lowest in 12 years amid forecasts for China’s slowest economic
growth since 1990.
This week Goldman Sachs Group Inc. highlighted tighter credit in the country, the world’s metals biggest consumer, as a challenge for copper prices.
“The surge in China credit growth is very positive news for metals,” said Will Yun, a commodities analyst at Hyundai Futures Corp. in Seoul. “Copper is almost at a bottom. It gives us a chance to buy.”
Aggregate financing was 1.69 trillion yuan ($273 billion), the People’s Bank of China said in Beijing today, topping the 1.2 trillion yuan median estimate in a Bloomberg survey. With economic growth headed below 7 percent, the central bank cut interest rates for the first time in two years in November.
Copper for delivery in three months rose as much as 2.5 percent to $5,685.50 a metric ton on the London Metal Exchange and was at $5,626 at 1:09 p.m. in Hong Kong. The metal fell 5.3 percent to $5,548 a ton yesterday and has lost 11 percent this year.
Led by a rout in energy prices, commodities have sunk, as a decade-long bull market spurred producers to boost output and a stronger dollar diminished the allure to investors.
As Bloomberg reports, inventories of the metal monitored by major exchanges in London, New York and Shanghai have climbed 7.4 percent this year.
March copper futures in New York advanced 1.7 percent to $2.5485 a pound, while the metal for the same month in Shanghai dropped 0.7 percent to 40,910 yuan ($6,602) a ton.
Nickel climbed as much as 1.8 percent to $14,567 a ton, while aluminum, lead, tin and zinc also advanced on the LME.
