Base metals, miners jump as China weighs big stimulus
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Base metals and related equities look poised for a strong rebound Thursday after recent declines, as China reportedly is considering a $220B stimulus package to boost its economy.
Bloomberg reported that China might allow local governments to sell bonds to raise money for infrastructure spending, which could pull in as much as $220B.
According to Reuters, benchmark copper on the London Metal Exchange (HG1:COM) recently traded +4.1% at $7,829/metric ton, after prices touched a 20-month low of $7,291.50/ton on Wednesday.
Prices also are higher for LME aluminum, zinc, nickel, lead and tin.
Relevant stocks are indicated sharply higher in the U.S. pre-market, including (NYSE:FCX) +3.9%, (TECK) +4.3%, (SCCO) +2.1%, (HBM) +2.9%, (RIO) +3.4%, (BHP) +3%, (VALE) +3.4%, (MT) +2.4%, (CLF) +2.7%, (X) +3%, (NUE) +2%, (NYSE:AA) +4.6%, (CENX) +8.1%, (ARNC) +2.1%.
Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY) and Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) each gain as much as 8% in European trading.
ETFs: (COPX), (CPER), (JJC), (JJCTF)
"A timely and decisive rollout of stimulus measures (over and above what has been announced) from China is required to support prices at current levels," Citi analysts said. "Without it, prices will grind lower."
"Copper is most exposed to an economic slowdown and prices could fall below $6,000/ton in the coming months in our base case," Bank of America analysts wrote. "If Europe runs out of gas, a risk, prices could decline to $4,500/t."
Spooked by recession fears, copper prices plunged more than 20% in Q2, the metal's biggest quarterly decline since 2011.
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Comments (43)
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Long PICK, RIO, HBM, and MT.
This also seems to have done some good for bulk shippers. Long SBLK.
Now we can watch and see if Mr. Market will sustain this trend.
GLTA
Markets can switch in days or weeks. Never invest in growth again.
Let the financial industry print their needed metals.
The risk for growth projects is always too high.
It takes years to keep a new mine running.
But, it takes just days or weeks to destroy metal markets.
Not long ago copper was the star metal for the hole decade.
Now, it is bullshit. Never any growth projects!
-- I'm pretty sure Europe will run out of gas, or at least get close to it, as the Freeport LNG terminal is expected to be offline till next year, which is when France recently said that they will run out of gas if they get a harsh winter. It will likely take more than 6 months for Europe to expand their LNG terminals and capacity."Bloomberg reported that China might allow local governments to sell bonds to raise money for infrastructure spending, which could pull in as much as $220B."
-- MIGHT. Yesterday they went in lockdown. Now they are thinking about stimulus. Let me know when it happens.
