KEY POINTS
- Copper prices hit a three-week low as doubts grow about China’s stimulus measures.
- China’s 2024 growth forecast is projected at 4.8 percent, missing the government’s 5 percent target.
- Market sentiment soured as weaker factory output signals lower copper demand.
Copper prices fell to a three-week low on Tuesday, driven by investor skepticism about whether China’s recent push to stimulate growth will translate into stronger demand for the metal.
The December copper contract on the Comex in New York dropped 1.54 percent from Monday’s settlement, hitting $4.33 per pound ($9,526 per ton) in early trading.
Similarly, the London Metal Exchange saw copper prices fall more than 1 percent, as confidence across China’s financial markets wavered.
Economic slowdown challenges demand for copper
China, the world’s largest consumer of copper, introduced several stimulus measures in recent weeks to revitalize its economy, aiming to meet a 5 percent annual growth target.
However, a Reuters poll forecasts the country’s growth rate at 4.8 percent for 2024, falling short of the government’s target. Projections for 2025 suggest a further slowdown to 4.5 percent, creating additional pressure on policymakers.
“The main pressure is coming from the consumption side, which is closely linked to deflationary trends,” said Xing Zhaopeng, senior China strategist at ANZ.
China’s finance minister recently announced plans to significantly increase government debt to stimulate growth, but the scale of the stimulus remains uncertain, leaving investors unsure about its impact on economic activity and raw material demand.
Investors eye key economic data from China
Markets are awaiting the release of China’s third-quarter GDP figures, along with retail sales, industrial production, and investment data on October 18, for clearer signals on the economy’s trajectory.
According to Mining.com, weaker factory output in China has already raised concerns about reduced industrial demand for copper, a metal widely used in construction, electronics, and manufacturing.
Moreover, the uncertainty has compounded fears of declining copper consumption, even as Beijing boosts stimulus efforts.
Despite the government’s actions, sentiment remains cautious across global markets. Investors remain skeptical about how much relief these policies will provide, given the structural challenges in China’s economy.
