Copper prices rebounded from a three-week low on Thursday, as investors bet that China, the world’s largest importer of the metal, would step up its economic stimulus in the face of weak manufacturing numbers.
Copper for July delivery, the most actively traded contract, closed up 0.7% at $2.8485 a pound on the Comex division of the New York Mercantile Exchange. Copper futures had ended at $2.8290 a pound Wednesday, the lowest settlement since April 29.
China’s manufacturing sector continued to shrink in May, although at a slower rate than in the previous month. Some investors believed the soft data would spur the Chinese government to launch more measures to steady its economy, which could boost demand for copper and other base metals. China accounts for some 40% of global copper consumption.
“The weaker numbers suggest that the Chinese government may need to continue lowering rates and reserve requirements,” said Edward Meir, a strategist at INTL FCStone, in a note to clients.
Prices also received a boost from a pullback in the dollar, a day after minutes from the Federal Reserve’s latest monetary policy meeting gave little indication of whether the central bank aimed to raise interest rates after the summer. Copper is priced in dollars and becomes less expensive to foreign investors when the U.S. currency weakens.