China reopened its borders earlier this week, causing the price of copper to rise even further. This comes after it released an announcement on new investment in the country that caused an initial increase in the price of the red metal.
China’s state media reported that the country’s southern manufacturing hub had more than 1,700 projects worth $945 billion planned for 2023. On the news, copper for delivery in March rose on the Comex market by 3%, to reach $8,866 per ton. The red metal was going for $4.03 a pound.
On the London Metal Exchange, three-month copper recorded a new high since June 2022, reaching $8,711 per ton. The most popular copper contract for March on the Shanghai Futures Exchange also increased, ending the day at $9,750.52 per ton.
Mainland China eliminated requirements making it compulsory for those travelling into the country to quarantine and opened land and sea crossings with Hong Kong. This move brought the dynamic COVID Zero strategy to an end. The strategy, which left one of the biggest economies in the world isolated since the coronavirus outbreak, heavily impacted the country’s economy.
The latest data from the government shows that following the reopening, more than 30,000 individuals from Hong Kong left the city through its land borders, headed for mainland China. This figure represents the biggest outflow since early 2020.
In a note, Malcolm Freeman, a director at Kingdom Futures, stated that the events observed in the last week had shifted the views of many individuals on the global economy. This, he said, had in turn resulted in talk of green shoots and signaled a full-steam-ahead attitude for China and the world economy at large.
The U.S. dollar also eased after the borders were reopened, with increasing hope that the Fed will slacken the pace at which its hiking interest rates following the jobs report published in December.
It should be noted though that copper smelting activity had recorded a dip globally in December after falling to its lowest level in six years, as most smelters closed down for maintenance following a year of little activity. A joint statement from Marex and Savant shows that the Chuquicamata smelter owned by Coldelco was still shut while the Yunxi plan had commenced an annual maintenance program at the start of December.
As the price of copper climbs, extractors such as Arizona Metals Corp. (TSX: AMC) (OTCQX: AZMCF) will have a chance to bolster their books and ensure stockholders get even better value from their investments.
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