Copper gains as China's central bank vowed to resolve local government debt risks

  • Kedia Advisory
  • Commodities News
Copper gains as China's central bank vowed to resolve local government debt risks
Credit: © Reuters.

Copper yesterday settled up by 0.42% at 728.7 lifted by better sentiment as China's central bank vowed to resolve local government debt risks, while low stocks also lent some supports. Financial departments should coordinate support to resolve local debt risks, enrich tools to prevent and resolve debt risks, strengthen risk monitoring and firmly hold the line on avoiding systemic risk, China's central bank said in a statement. China cut its one-year benchmark lending rate, as expected, as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged.

Copper stocks on SHFE fell 25.9% on-week last Friday to 39,228 tons, the lowest since September 2022. Net long positions of copper on the London Metals Exchange (LME) are at a six-month high, partly fuelled by low Chinese copper inventories data. Combined inventory in the Shanghai Futures Exchange and Chinese bonded warehouses were 110,314 metric tonnes on Aug. 11, down 53% year-on-year and equivalent to just under three days of consumption. Chinese copper stocks readily available in the spot market, which includes stocks in warehouses of the Shanghai Futures Exchange, totalled 82,600 tonnes on Aug. 14, up 17.5% year-on-year.

Technically market is under short covering as the market has witnessed a drop in open interest by -9.95% to settle at 4002 while prices are up 3.05 rupees, now Copper is getting support at 725.3 and below same could see a test of 721.8 levels, and resistance is now likely to be seen at 731.1, a move above could see prices testing 733.4.

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