China Demand Offset Fed Rate Hike: Copper Prices Rebound

Copper prices have rebounded in India as rising physical demand from China counteracts the impact of the US Federal Reserve's interest rate hike. According to Kedia Advisory, copper settled at ₹1,395.05 on the back of improving physical market conditions. Domestic copper premiums have surged to 645 yuan per tonne, a high not seen since December 2023, while the Yangshan premium reached $118 per tonne, its highest level in nearly four years.

The stronger US dollar resulting from the Fed decision remains a broader headwind for industrial metals. However, policymakers project one more rate increase this year and stable rates in 2027 alongside higher near-term inflation forecasts. Supply concerns also contributed to copper's gain, as Chilean production declined 9.4% year-on-year in July due to severe weather and maintenance.

The global refined copper market reported a 60,000-tonne deficit in June compared to a 15,000-tonne surplus in May. Meanwhile, China's unwrought copper and product imports decreased by 11.5% year-on-year to 425,000 tonnes in July, with January-July imports down 6.2% to 2.92 million tonnes.