Copper futures advanced on news that the Chinese government looks to support lending, improving demand outlooks and backing the construction sector. Yesterday the contract fell for the first time in five sessions, amid weakening industrial production in top-consumer China. More industrial and housing data from the US is due later this week.
Copper futures for settlement in July gained 1.04% to trade at $3.1680 per pound at 12:09 GMT today on the COMEX in New York. Prices shifted in a daily range between $3.1225 and $3.1700 a pound, reaching a two-month high. Yesterday the contract fell by 0.44% on slowing industrial output in China, while it has added 3.82% over the previous three sessions.
The Peoples Bank of China urged commercial banks to “improve efficiency of service, give timely approval and distribution of mortgages to qualified buyers,” Bloomberg reported. The move comes as the housing market, and the economy in general show signs of cooling.
The construction sector, including the infrastructure and power grid development, accounts for more than 60% of total copper consumption in China, while the country consumes more than 40% of the world supply of the red metal.
“There’s some speculation about a reserve requirement ratio,” said for Bloomberg Wu Kan, fund manager at Shanghai-based Dragon Life. “It may not come immediately, but probably next month.”
New loans in China fell short of expectations in April, a report revealed on Monday, while industrial output and investments, also for April, logged a slight slowdown. However, construction is entering peak season and the government has been purchasing massive amounts of bonded copper, supporting the red metal.
Tomorrow a number of reports from the US are due, with industrial production, manufacturing gauges and CPI figures set for release. On Friday readings on housing in the US will be reported.
Technical view
According to Binary Tribune’s daily analysis, in case Copper July futures manage to breach the first resistance level at $3.1523 per pound on Monday, they will probably continue up to test $3.1692. In case the second key resistance is broken, the industrial metal will likely attempt to advance to $3.1843.
If the contract manages to breach the first key support at $3.1203, it may continue to slide and test $3.1052. With this second key support broken, the movement to the downside will probably continue to $3.0883.
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