Copper is bouncing back and prices are up 1.2% to $US2.9860 per pound. The metal was down 2.2% to $US2.8880 per pound earlier today.
Copper prices have been falling recently and today’s sell off came after news that Chinese property developer Zhejiang Xingrun Real Estate has collapsed. China’s property sector accounts for about 40% of copper demand.
Concerns about slowing Chinese growth and domestic bond defaults have weighed on copper. There have been concerns that copper-backed loans in China are expected to unwind. Some 60-80% of China’s copper imports have been used as collateral.
Not everyone agrees however. From Goldman Sachs (via FT): “In contrast to some media reports, we find that the bulk of Chinese commodity financing deals are ongoing, facilitating ‘hot money’ inflows into China and providing a mechanism to import low cost foreign financing.” They argue it remains a supply-demand story. With declining demand in China as supply stays strong.
Here’s a look at how copper’s been trading today: