On Thursday, copper prices surged past $10,000 per ton, buoyed by China’s introduction of new stimulus measures targeting its real estate market. In early trading on New York’s Comex, December copper futures reached $4.64 per pound ($10,208 per ton), a 3.4% increase from Wednesday’s settlement price. On the London Metal Exchange (LME), three-month copper briefly surpassed the significant $10,000 per ton mark, hitting $10,089.50, the highest since June 7.
To stabilize the real estate market, China announced its largest package yet, which includes substantial interest rate cuts, measures to halt real estate decline, lower mortgage down payments, and reduced interest rates on existing home loans. Additionally, reports suggest China is contemplating a $142 billion infusion into its largest state-owned banks.
Furthermore, the People’s Bank of China has rolled out several major initiatives, including lowering reserve requirement ratios and policy interest rates. Given recent domestic and international conditions, a shift towards a more accommodative monetary policy seems inevitable. These measures represent the most extensive stimulus package since the pandemic, aiming to pull the economy out of deflation and achieve the government’s growth targets.
In March 2024, during an interview on “METALS 100,” Rob McEwen, Chairman and major shareholder of McEwen Mining (MUX), expressed greater optimism about copper compared to two years ago, calling it a vital component of the company’s value. McEwen predicts rising copper demand and a potential supply shortfall. McEwen Mining owns a massive deposit containing 37.6 billion pounds of copper, with production costs below $600 per ounce, indicating significant profit potential.
China, as the world’s second-largest economy and the biggest copper consumer, accounts for a large portion of global copper consumption, especially in the power industry, where copper use is nearly half. Therefore, China’s economic growth or slowdown directly impacts copper demand. Historical data shows that when China’s economy grows steadily, particularly with extensive investment in infrastructure and real estate construction, copper prices typically rise.
Beyond factors in China, recent U.S. data indicates a stronger-than-expected economy, further boosting market sentiment.
Earlier this month, analysts at Bank of America forecasted copper prices to exceed $10,000 per ton by 2025, based on factors such as high demand, constrained supply, and increased investment in energy transition projects. The analysts believe that with the Federal Reserve lowering interest rates, manufacturing activity should stabilize, maintaining their optimistic outlook on copper prices for 2025.
