Copper regains positions as China calls for steady growth

Copper rebounded from Tuesdays three-week low on Wednesday and surged more than 1% on speculation the Chinese government is determined to stabilize growth in the second half of the year, thus boosting demand for raw materials.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at $3.081 a pound at 8:56 GMT, up 1.28% on the day. Prices ranged between days high and low of $3.082 and $3.038 a pound respectively. The industrial metal plunged 1.97% on Tuesday, extending this weeks decline to 0.7% after slipping nearly 1.6% in the preceding two.

Copper rose today on speculation the metals demand prospects will improve after a Politburo meeting was held yesterday by President Xi Jinping. The official Xinhua News Agency reported that China will maintain steady second-half growth amid “extremely complicated domestic and international conditions. The Asian nation will also support a healthy real estate market.

Cheng Xiaoyong, an analyst at Baocheng Futures Co., said for Bloomberg: “A shift of China’s stance from pushing forward reform to maintaining growth may have significant implications for copper prices.”

The metal was pressured in the past months amid faltering demand prospects as top consumer Chinas economy started to slow down. The country accounts for more than 40% of global consumption. The National Bureau of Statistics of China will release its official Purchasing Managers’ Index (PMI) on Thursday. According to a Bloomberg survey, the reading may have dropped to 49.8 from 50.1 in June, signaling the first contraction in 10 months. The country’s HSBC/Markit PMI fell to 47.7, compared to June’s final reading of 48.2, the lowest in 11 months. Final reading will also be released on August 1.

Copper fell to a three-week low on Tuesday as China reported more than half of its provinces trailed growth targets for the first half of the year. According to data compiled by Bloomberg, seventeen out of 30 provinces’ economies grew less than expected up to June, compared to 14 out of 31 last year. This imposed a threat for meeting the year’s nationwide GDP growth target at 7.5%.

Meanwhile, market players are also keeping a close eye on the outcome of FOMCs two-day meeting, which ends today. Feds meeting statement will be released at 18:00 GMT and will have a strong impact on dollar-denominated commodities as it will determine the greenbacks strength. The dollar trades inversely to dollar-priced raw materials.

The U.S. currency swung between gains and losses and remained almost unchanged this week following some overall controversial U.S. data. The dollar index, which measures the greenback’s performance against a basket of six major peers, traded at 81.81 at 8:58 GMT on Wednesday, down 0.14% on the day. The September contract surged 0.16% on Tuesday and has so far advanced 0.06% on the week after falling more than 1.6% in the preceding two.