Copper price regained some ground on Monday after hitting a two-month low on Friday.
Copper for delivery in July rose 0.6% from Friday’s settlement price, touching $4.18 per pound ($9,196 per tonne) midday Monday on the Comex market in New York.
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The metal’s price slumped on Friday, pressured by China’s plan to sell reserves, and a firm dollar buoyed by the prospect of US interest rate hikes.
The pledge by China’s strategic stockpiler to release inventories was a serious sign of Beijing’s desire to quell prices, as was a warning for state firms to reduce exposure to overseas commodities markets.
But even if planned sales to end-users boost domestic supply, investors have questioned China’s ability to have a sustained impact.
“We do not think the rally is over,” Citigroup Inc. analysts said in an emailed note.
According to the bank, Beijing’s measures “target managing expectations and deterring speculators rather than solving supply/demand imbalances.”
With inventories low, it’s likely that investors will buy into prices declines, reigniting the rally in coming months, Citi said.
China’s copper exports edged up for a third straight month in May to their highest level since March last year, customs data showed on Friday, as higher international prices encouraged traders to ship more metal overseas.
China is the world’s top copper consumer, and rarely exports large amounts.
However, last month’s surge in London Metal Exchange copper prices to a record high has not only made imports less favorable for China, but also incentivized shipments in the other direction.
Exports of unwrought copper and copper products were 79,044 tonnes last month, 3.4% up from April and up 67.7% year-on-year.
(With files from Reuters and Bloomberg)