Surging Copper Prices... Is China's Economic Recovery for Real This Time?

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Bloomberg reported on the 5th that copper prices, one of the 'leading indicators of the 경기 (Gyeonggi) economy,' are stirring amid the atmosphere of China's economic recovery.

According to the London Metal Exchange, as of 1:30 PM that day, copper prices rose 0.75% compared to the previous trading day, reaching $9,754.50 per ton. This is the highest price in a month since October 11th ($9,810).

Copper, nicknamed 'Dr. Copper,' is considered a leading economic indicator because its demand increases when industrial production rises. Copper prices surpassed $10,000 per ton in May, marking the highest level in two years, but have since fluctuated amid growing concerns over deflation (falling prices during economic downturn) in China.

Bloomberg evaluated that copper prices could show an upward trend as signs emerge that the large-scale stimulus measures rolled out by the Chinese government since the end of September are gradually taking effect.

In fact, various indicators that can gauge China's economic trends are showing positive signs. On this day, Chinese financial information provider Caixin announced that the Caixin Services Purchasing Managers' Index (PMI) for October rose from 50.3 in the previous month to 52.0. A PMI above 50 indicates economic expansion, while below 50 indicates contraction; this October PMI means that China's service sector is expanding at the fastest pace in the past three months. The manufacturing PMI for China, released on the 31st of last month, also rose 0.3 points from the previous month to 50.1, surpassing market expectations (49.9) and marking an exit from the contraction phase after half a year.

There is also speculation that if additional economic stimulus measures are announced at the Standing Committee of the National People's Congress of China, which is held from the previous day until the 8th, copper prices could widen their gains.

Moreover, Wall Street analysts predict that industrial metals including copper will temporarily rise after the U.S. presidential election. Citigroup stated in a press release on the 4th that regardless of whether former President Donald Trump or Vice President Kamala Harris wins the election, copper prices could temporarily rise to $10,000 per ton by next week. According to Citigroup's analysis, copper prices rose in 9 out of the last 10 U.S. presidential election periods. Meanwhile, other industrial metals such as aluminum and iron ore also showed simultaneous upward trends.

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