Copper hits a new high in more than two years: us fiscal stimulus is good for copper prices

SMM: December copper futures rose 1.6% on Wednesday to close at $3.1985 a pound, the highest closing price since June 2018.

Soci é t é G é n é rale said in a report that fiscal stimulus measures in the United States and strong industrial momentum in China will bring healthy demand to the copper market. After the novel coronavirus epidemic, the economic recovery may also encourage more fund managers to be bullish on copper prices.

Hopes of a fiscal stimulus deal by early November have been revived in the US today. White House Chief of staff Meadows said the goal is to reach an agreement within the next 48 hours and to pass the text needed for next week's congressional vote over the weekend, in line with House Democratic Speaker Nancy Pelosi. Kudlow, the White House economic adviser, said that even if the compromise deal had to wait until a vote after the election, the pre-election announcement itself "would be of great help to the economy and the market." However, Senate Republican leader Mitch McConnell warned the White House not to reach an agreement before the election, or it could undermine the Senate's plan to confirm the nomination of Justice Barrett next week. Goldman Sachs believes that the fiscal stimulus bill will not be passed before the election.

On China's economy, industrial production rose 6.9% in real terms in September from a year earlier, 1.3 percentage points faster than in August, according to data released by the National Bureau of Statistics on Monday. On a month-on-month basis, the added value of industries above scale increased by 1.18% in September over the previous month.

Anna Stablum, a commodities broker at Marex Spectron, said: "there are some potential supply disruptions in Chile and various factors support higher prices. As the situation in Europe and the United States deteriorates and the number of novel coronavirus cases increases, more stimulus measures will be needed, which will help commodity prices rise. "

In addition, last week, there was a strike at the (Candelaria) copper mine in Candelaria, Chile, which also helped push up copper prices. "in view of the constant blockade, attacks on our employees and facilities put our workers at risk," the mine said in a statement. Candelaria decided to suspend operations from October 20. "

Although the mine is small by Chilean standards. However, other mines in the country may also have to deal with future strike negotiations. The Candelaria mine produced 111400 tons of copper in 2019 and reached 74200 tons in the year to August.

It is worth noting that Escondida (Escondida) is the largest copper mine in the world, with an output ten times that of Candelaria. At present, Escondida is going through a similar negotiation process.

In addition, SocGen said in the report that on the data side, long positions in copper futures rose by $1 billion in the week of October 13, while short positions rose by $163 million. That means a net new long position of $842 million. Short positions were at their lowest level since January 2017 in September.