According to Bloomberg it could be a boost into China’s property investment that sends copper prices higher over the next few days. Bloomberg point out a very interesting correlation in that a rise in Chinese property investment tends to lead to a rise in the Bloomberg Industrial Metals subindex. They are linked. If you take a look at the chart below you can see the relationship and how it has been playing out recently.
In July of this year property investment moved up +3.4% y/y vs the estimated reading of 2.5% y/y. This was also faster than June’s +1.9% pace. This also occurred in tandem with record volumes of steel and aluminium last month. So, this resurgence in was enough to help copper pull off last Friday’s lows and held the key trend line on the daily chart as outlined on the chart below:
The ongoing tech war between the US has led China to focus on kickstarting domestic demand. However, the People’s Bank Of China’s stimulus has been coming in at a steady pace (rather than a fast pace) and the consumption rebound is showing signs of stalling. Property investment on the other hand remains the main driver of China’s economic recovery. So, this could be another reason to boost copper higher over the next few days. Take a look at copper below and the key trend lines ahead that will need to break in order to open the way higher for bulls.