Copper shaken by China’s report

Copper is broadly unchanged on the day after the HSBC Chinese manufacturing purchasing managers index report dropped to an eight month low.

Copper is trading at 295 cents per pound, flat on the day as traders don’t know which way to turn following the poor Chinese manufacturing PMI report. The red metal is off over 12% since the start of the year because of concerns the Chinese economy is slowing down. For the second consecutive month, China has reported weak manufacturing numbers and traders have been taking additional short positions.

Whenever China goes through a period of weak growth, it is not unusual to see the People's Bank of China (PBC) announce a stimulus package to boost it. There is talk of the Chinese central bank injecting cash into the credit market, which explains why we have been seeing some buying in copper. If the PBC does provide any liquidity to the Chinese interbank market, we could see copper head towards the 300 cents per pound mark. 

High grade copper chart

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.