Cautious rebound in copper prices in favor of recovery in China
The stimulus announced by Beijing has given hope to investors and the recovery is visible in China, the country which absorbs half of the world's copper. Getty Images / Xvision
By: Claire Fages Follow
It is the metal barometer of the world economy. Copper has benefited from a price rebound for two months. But it has not returned to its level before the Covid-19 epidemic.
Copper has crossed $ 5,500 a tonne. After 4.8% higher in April, the red metal rose 3.6% again in May. This is an encouraging sign, copper being one of the raw materials most correlated to the world economy.
The stimulus announced by Beijing has given hope to investors and the recovery is visible in China, the country which absorbs half of the world's copper. As evidenced by the improvement in the Chinese manufacturing index in May. The Chinese rebound is even more marked in construction, which accounts for 20% of demand for copper.
Chinese export sector remains depressed
But the rest of the world economy is paralyzed. We must not wait for growth before 2022 in the United States, estimates the bank Goldman Sachs. The American manufacturing index is still in negative territory. In the euro zone, it is at its lowest, as we see for the automobile. However, China depends on all these regions to revive its export industry. If the activity starts again in V on Chinese soil, the exporting sector, it will have the maximum appearance of an L, predicts a broker of raw materials from Hong Kong.
China, for example, exported 7% fewer air conditioners between January and April. However, they contain copper. The Chinese recovery plan is only the acceleration of an existing infrastructure plan where new uses of copper will weigh little, estimates the bank ING. Not to mention that we are not immune to a rebound in the epidemic in Hong Kong.
More optimistic but cautious investment funds
All of this makes investors very cautious. If the funds no longer bet on the fall in copper prices, they also do not position themselves on additional purchases, said an analyst at IG France. Pessimism is reduced, but optimism is not there.
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