China`s central bank made a system-wide cut to bank reserve requirements this week, the first time it has done so in over two years, to unleash a fresh flood of liquidity to fight off economic slowdown and looming deflation. This is expected to benefit Copper in long run. Copper was facing sharp declines on the back of expected weakness in the prices of Copper.
The announcement cuts reserve requirements - the amount of cash banks must hold back from lending - to 19.5 percent for big banks, a reduction of 50 basis points that would free up 600 billion yuan ($96 billion) or more held in reserve at Chinese banks - which could then inject 2-3 trillion yuan into the economy after accounting for the multiplying effect of loans.
The fears of surplus in the Copper markets are getting mitigated and this is creating positive energy among the stakeholders. BHP Billiton, a major in Copper production has mentioned that the Olympic Dam mine production in Australia will be cut by 60,000-70,000 tonnes this year, or more than a third of the targeted output levels, due to repair and maintenance work, the miner said on Friday.
Post A Comment: