Copper Futures gain over 1% on upbeat China inflation data

Copper Futures surged more than 1% on Monday, underpinned by an upbeat set of macro data coming out of China, the largest copper importer worldwide.

Data by the National Bureau of Statistics of China showed over the weekend that the country had registered positive inflation in August, following the first deflation reading in more than 2 years in July.

China’s annual consumer price inflation stood at 0.1% in August, while accelerating from -0.3% in the prior month. Non-food prices surged 0.5% YoY, driven by higher costs of clothing (+1.1%), health (+1.2%) and education (+2.5%). Food prices dropped 1.7% YoY in August, or matching the rate in July.

Annual core consumer inflation, which does not take into account volatile categories such as food and energy, remained steady at 0.8% in August – the highest since January.

Meanwhile, China’s producer prices decreased at the slowest annual rate since March in August. The country’s Producer Price Index decreased 3% year-on-year in August, in line with market expectations, following a 4.4% slump in July.

Costs of production materials dropped at a smaller pace, 3.7% YoY, in August compared to July amid a slower drop in processing prices (-3.1%), raw materials (-4%) and extractions (-9.9%).

Those data prints, along with more government measures in support of the nation’s property sector, added to optimism over economic recovery.

Additional support to copper prices came from a weaker US Dollar.

As of 11:20 GMT on Monday Copper Futures for delivery in December were gaining 1.53% to trade at $3.7735 per pound, while bouncing off an over 3-week trough.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was last edging down 0.35% to 104.347 on Monday.