Copper prices in Shanghai saw an uptick on Monday, buoyed by optimistic industrial data from China that improved the demand outlook for the metal. The most-traded May copper contract on the Shanghai Futures Exchange closed morning trade 0.7% higher at 72,810 yuan per metric ton, following a notable 5.4% increase in March, marking the largest monthly gain in 16 months. The positive momentum was driven by an official factory survey released on Sunday, indicating an expansion in China’s manufacturing activity for the first time in six months in March.
While the growth rate was moderate, it represented the highest Purchasing Managers’ Index (PMI) reading since March of the previous year, when China’s economic recovery momentum began to slow following the initial lifting of COVID-19 restrictions.
Additionally, easing U.S. prices contributed to investor optimism regarding potential interest rate cuts by the Federal Reserve in June. However, the gains were tempered by elevated inventories, with on-warrant copper stocks near a four-year peak and nearly nine times higher than at the start of the year. The surplus stocks were attributed to subdued demand from end users, particularly after a surge in copper futures last month prompted smelters to adjust their production plans due to raw material shortages.
Despite these challenges, spot prices for purchasing copper remained at a discount compared to futures prices over the past week. In other metal markets, SHFE aluminum and zinc prices edged higher, while nickel, lead, and tin prices experienced slight declines during the trading session.