These moves have spurred market optimism that China, the world’s largest consumer of bulk commodities, can stop the rapid economic slowdown, boosting other industrial metals and China, Europe and the US stock market.
The London Metal Exchange (LME) index copper futures closed 3.2% higher at $5,918 a tonne, the biggest one-day gain since September.
But copper prices still fell 1.3% this week, as Apple issued a revenue warning, saying that China’s iPhone sales will be worse than expected, and concerns about the Chinese economy will increase.
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“China (downgraded the deposit reserve ratio) successfully reversed the decline,” said Robin Bhar, an analyst at Societe Generale. “But all this is likely to reverse next week. It depends on the outcome of trade negotiations. If trade disputes escalate, this The rebound will be short-lived.”
However, Bhar said he expects industrial metal prices to rise by 5-10% this year, as weak demand will be offset by tight supply.
The People’s Bank of China announced on Friday that it decided to cut the deposit reserve ratio of financial institutions in January 2019 to replace some of the medium-term borrowing facilities, which were reduced by 0.5 percentage points on January 15 and January 25, respectively. At the same time, the Medium Term Lending Facility (MLF), which expires in the first quarter of 2019, is not renewed.
The RRR cut will release about 1.5 trillion yuan of funds, plus the upcoming release of the Medium Term Lending Facilitation (TMLF) operation and the funds released by the inclusive financial assessment of the Infinity Finance, and then consider the medium-term borrowings due in the first quarter of this year. After facilitating the factors that are not to be renewed, the net release of long-term funds is about 800 billion yuan.
The Chinese Ministry of Commerce said on Friday that China and the United States will hold consultations at the vice-ministerial level on economic and trade issues from January 7th to 8th.
Caixin/Markit jointly announced on Friday that China’s service purchasing managers’ index (PMI) in December rose 0.1 points to 53.9 quarter-on-quarter, a half-year high.
The United States announced that the number of new jobs created in December was the highest in 10 months, and salary growth showed that the economy continued to strengthen, which may alleviate concerns about a sharp slowdown in economic growth.
Among other metals, LME aluminum closed up 1.6% at $1,865 per tonne;
Zinc futures rose 2.5% to US$2,438 per tonne;
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Lead was up 0.9% at $1,950 per tonne;
Nickel rose 2.2% to $11,110 per tonne.
Tin Tin closed down 0.1% at $19,550 a tonne.
In addition to lead and zinc, prices of other metals have risen this week.