Copper price marches towards monthly high on mixed concerns surrounding China, Fed

Copper price extends recovery from weekly lows, renews daily high of late.
China’s stimulus, power crunch favor bulls while Sino-American tension, covid woes test upside momentum.
Cautious mood ahead of Fed Chair Jerome Powell’s Jackson Hole speech also challenge copper buyers.
Increase in global copper mine production during January-June also teases bears.

Copper prices remain firmly on the way to the monthly high, marked earlier in the week, as buyers seem to prepare for a possible pullback ahead of the key data/events during early Friday. In doing so, the industrial metal struggles to justify mixed clues surrounding China and the US.

Talking about the positives, China’s near one trillion stimulus and a holistic approach by the domestic institutions to safeguard the world’s second-largest economy renewed the copper market optimism. On the same line could be the power shortage in the nation as it leads to more demand for the red metal used for power generation and transmission, as well as storage. Furthermore, mixed US data and Fedspeak also appear to underpin the metal’s recent upside momentum.

On the contrary, the cautious mood ahead of the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed’s preferred inflation gauge, as well as Fed Chair Powell’s Jackson Hole speech, seems to weigh on the sentiment and the copper price. Additionally, news that China’s county near Beijing declared lockdown due to covid joined the US suspension of 26 Chinese carrier flights in response to Beijing’s action to weigh on the quote. Also, an increased military budget of Taiwan, a jump in the number of US diplomats visiting Taipei and US President Joe Biden’s hard stand on Iran’s position in Syria appears to have exerted additional downside pressure on the market sentiment, as well as on the metal price.

Furthermore, a 1.3% YoY increase in the global copper mine production from January to June, totaling 10.6 million tonnes, as per the World Bureau of Metal Statistics (WBMS), also challenges the metal buyers.

It’s worth noting that Bloomberg’s analysis suggesting economic challenges for China, despite the latest efforts to avoid recession, seems to doubt the metal’s upside momentum.

Looking forward, the US Core PCE Price Index, expected to ease to 4.7% YoY from 4.8%, could decorate the calendar but major attention will be given to headlines surrounding China and Fed Chair Powell’s ability to defend hawkish moves.