Copper Rebound Continues as Market Eyes China Arbitrage

Copper extended its rebound from the lowest close in five months as orders to withdraw the metal from London Metal Exchange warehouses suggested China’s demand slump may have bottomed out.

Three-month futures rose 1.8% as of 6:04 p.m. in London, fueled in part by the biggest cancellation of LME copper since April.

The gain comes after a surge in cathode exports from China and into the LME network caused copper prices to slump 19% from May’s record. China accounts for more than half of global copper consumption, and the exports, combined with weak industrial data, undercut bullishness around its demand prospects in artificial intelligence data centers.

Since then, an arbitrage window to import refined copper to China has reopened, causing premiums for the metal there to rise, while orders to withdraw units from the LME have started increasing. LME data Monday showed on-warrant stocks dropped by 7,375 tons. 

The metal also gained in response to news that a subsidiary of Chinese copper giant Jiangxi Copper Co. shut its Shandong plant, which produced more than 200,000 tons of copper last year, after a fatal accident. In Africa, copper exports may experience a bottleneck due to a weekend border closure between Zambia and the Democratic Republic of Congo, the world’s second largest producer of copper.

Copper may rebound toward $9,100 a ton as concerns over the possibility of a global recession ease, Jinrui Futures Co. said in a note. Investors are waiting for clearer guidance from the macro economy and more inventory drawdowns, it added. 

All base metals advanced, with nickel gaining 1.1%. 

With assistance from Sana Pashankar.

This article was generated from an automated news agency feed without modifications to text.