Copper fails to react as China lays out economic plans
Beijing (Jan 18) It is no secret that the Chinese economy has not managed to bounce back after the covid-19 pandemic. The nation has continued to struggle with new cases reported every day. This means that some important supply chains have been restricted by the pandemic. Ports and important shipping areas have been impacted with some key areas being put into lockdown following outbreaks.
The Chinese central bank and government have been on the wires overnight. The People's Bank of China (PBoC) lowered its one-year loan prime rate by five basis points to 3.8%, the first cut since April 2020. Soon after, Communist Party general secretary Xi Jinping gave a speech to the World Economic Forum warning against excessively fast monetary tightening. The move from the bank was somewhat of a surprise as thirty-four out of the 48 traders and analysts, or 70% of all participants, polled by Reuters last week predicted no change to the MLF rates.
The National Development and Reform Commission (NDRC) said in the Q4 property sector GDP growth fell -2.9% y/y but the 2021 Property sector GDP managed to grow +5.2% y/y. The NRDC also approved CNY18.5B in fixed asset investments during December, Q1 GDP to be in a reasonable range, will "front load" infrastructure investment, and urges caution in imposing policies with a contractionary effect.
In regards to a plan, PBoC Vice Governor said the bank will roll out more policy measures to stabilize growth as downward pressure persist. In addition to this, the PBoC's vice governor added the bank will step up cross-cyclical policy adjustments in 2022. Confirming this, the NDRC said that China still has "relatively big" room for macro policies and has more policy tools in reserve.
Copper is in an almighty consolidation at the moment and the price is currently testing the mean value area. Interestingly, on the recent move higher there was a massive spike in volume which suggests bullish moves have more market backing. Recently since 14th December, the price has made a few higher high and higher low waves but the bulls will need to break $4.60lb to keep that run going. On the downside, the main support level to watch stands at $4.32/lb over the next couple of days.
KitcoNews
