Copper prices rise after data on China’s GDP and industrial production
- China's GDP grew by 6.5% in Q4'20; higher than the estimated 6.1% and Q3's 4.9%.
- The Middle Kingdom's industrial production YoY rose by 7.3% compared to an estimate of 6.9% and prior 7.0%.
- While copper prices are up by 1%, there is price consolidation due to the recent COVID-19 outbreak in Beijing.
Copper prices rose by 1% on Monday, to trade at $3.63. The surge is a reaction to the bullish numbers released earlier today on China’s GDP growth and industrial production. The figures have helped fuel the positive sentiment on China’s rising demand for Copper. However, the observed price consolidation is due to the recent report on a coronavirus outbreak in the Asian country.
Copper prices are reacting to the bullish figures released by China’s National Bureau of Statistics. On Monday, the agency indicated that industrial production (YoY) rose by 7.3% in December. The reading beat the estimates of 6.9% and the previous month’s 7.0%.
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Since August 2020, industrial output in the country has been growing steadily; surpassing experts’ forecasts. While the previous reading was at par with the estimates, it was a point higher from the prior month’s figure.
The bullish trend is also observable on a year-to-date basis. In December, the industrial output rose by 2.8%, which was higher than November’s 2.3%. China’s economic resilience has been fostered by exports. While countries across the world were struggling to stay afloat at the peak of the coronavirus pandemic, the Middle Kingdom’s industrial production was growing steadily. In fact, the year-to-date numbers have been positive since March 2020.
Copper prices are further responding to the steady growth in China’s GDP. In Q4’20, the GDP of the second-largest economy grew by 6.5%. It beat the predicted 6.1% and further surpassed Q3’s 4.9%. While the figures missed the beat in Q3, there still was a significant growth from Q2’s 3.2%.
On 14th January, the released data showed that China’s trade balance was at 78.17 billion in December. Analysts had forecasted a reading of 72.35 billion, which would have been a decline from November’s 75.40 billion. The Asian country has recorded a trade surplus for three months in a row.
To those looking to invest in commodities, the GDP, industrial output, and trade balance numbers from China are an indication of a rising demand for copper. While exports grew at a slower rate in December compared to November, they still beat the estimates of 15.0% to reach 18.1%.
Among the Chinese goods that saw a rise in demand is health care equipment and work-from-home gadgets. Notably, copper is a crucial metal in the electrical and industrial sectors. As such, an increase in the demand of such products is bullish for copper prices. The demand has been high enough to cause a bottleneck on the supply-side, especially in Europe and the U.S.
While copper is trading in the green, there is an observable price consolidation. The recent coronavirus outbreak in the Middle Kingdom has caught the attention of investors. On 13th January, Beijing reported over 100 COVID-19 cases, which is the highest figure since July 2020. As a result, the government has enacted restrictive measures considered to be the strictest since the declaration of the disease as a pandemic.