FX.co ★ Copper Extends Upswing

Copper futures in the United States hovered around $4.65 per pound on Wednesday, maintaining their recovery thus far this week. This is attributed to China's economic stimuli and a weaker US dollar, which temporarily counterbalanced concerns over manufacturing demand and the abundant copper supply in North America. The People's Bank of China (PBoC) reduced key lending and liquidity rates shortly after credit data showed an increase in government bond issuance in April, reinforcing Beijing's commitment to bolstering factory activity. Nevertheless, the uptick in copper supply to the US moderated the recovery. Heightened ore production from South America has raised the possibility of a larger surplus this year, prompting traders to close long positions on US copper futures—positions initially opened after Trump announced an investigation into copper import tariffs. This scenario coincided with an increase in domestic copper inventories and a reduction in London Metal Exchange (LME) inventories, as metal was redirected to the United States to protect factories from potential tariff threats. Consequently, the price gap between US and London copper futures has narrowed.