Copper futures are settling higher on Tuesday as investors are ostensibly taking profits. The industrial metal seems to have found direction after topping $3 last week, driven primarily by the recovering Chinese economy. Copper prices have been trading near their best levels in two years.
October copper futures fell $0.018, or 0.59%, to $3.05 per pound at 19:57 GMT on Tuesday on the New York Mercantile Exchange. Copper has posted a significant rally since hitting bottom in April, rising nearly 20% over the last three months. Year-to-date, the red metal is up close to 10%.
Although copper pared some of its gains, the industrial metal is likely to find support on positive Chinese data. August industrial production had its best monthly performance since December 2018, expanding at an annualized rate of 5.6%. Beijing reported growth in nearly all categories, except for transportation equipment output.
Overall, China’s strong demand is expected to continue as the nation attempts to restock its inventories. It is also looking to take advantage of a weaker US dollar amid its commodities buying frenzy.
In a new report, Fitch Solutions revised its adjustment to its 2020 copper price forecast from $5,900 per ton to $6,000 per tone. It does anticipate copper prices to trade sideways for the rest of the year, despite its meteoric ascent in recent months. The biggest factor for price growth will be additional fiscal stimulus by the Chinese government.
In other industry news, Peru’s economy contracted 11.71% in July compared to the same time a year ago. This represented the fifth consecutive month of contraction because of the coronavirus pandemic, although the reading was better than the 12.2% decline the market had penciled in. This is noteworthy because Peru is the world’s second-biggest copper producer.
The coronavirus has hammered the Peruvian economy, with more than 734,000 confirmed cases and a death toll of nearly 31,000.
In other metal markets, December gold futures dipped $2.399, or 0.12%, to $1,961.30 per ounce. October silver futures shed $0.035, or 0.13%, to $27.32 per ounce. October platinum futures picked up $19.80, or 2.07%, to $978.50 per ounce. October palladium futures surged $81.40, or 3.5%, to $2,405.80 an oz