Copper Prices Rise on China’s Interest Rate Cut
Copper prices jump the most in 3 months as the biggest consumer of copper in the world – China – lowered interest rates to boost growth. Copper prices have been very low over the last 2 years.
The London Metal Exchange (LME) reported a 38% decline in copper stockpiles in 2012, and is predicting a shortage of copper by the end of 2013. This will cause a supply-side shock and have a major impact on copper prices worldwide.
China – the largest manufacturing nation in the world – lowered key interest rates making borrowing cheaper. This move is designed to generate economic growth, and will have a boost to the manufacturing sector which relies heavily on copper as a crucial component in the manufacturing process and in electronic products. China currently demands 41% of the global copper demand. With the increased demand will come less supply and therefore prices will have to rise to reach a new equilibrium.
