Copper price rally builds as China’s spending balloons
Copper advances to 12-week high on Thursday as China’s $700 billion stimulus program focussed on so-called “new infrastructure” and “new urbanization” kicks into gear.
Copper trading in New York jumped to $2.5025 a pound ($5,515 a tonne) in lunchtime trade, bringing the bellwether metal’s gains since its mid-March low to just under 27%.
BMO Capital Markets, a bank, in a research note points out that data from China’s Ministry of Finance shows the value of special purpose bonds issued – destined for local government spending on infrastructure – has already surpassed the full year total in 2019.
BMO says “new urbanization” refers to refurbishing old urban housing stock, railways, airports, and upgrades to power grids and local utilities while “new infrastructure” includes 5G networks (base stations are already being constructed at a clip of 10,000 a week), ultra-high voltage power grids, EV charging stations, and data centers.
Needless to say all of these investments need massive amounts of copper.
China already consumes more than half the world’s copper and its refineries are sucking in concentrate at higher rates than the record setting 2019 total of 22m tonnes.