Copper prices slide as stimulus doubts grow
Copper prices gave back 50% of the gains from Chinese stimulus announcements. Traders question the scale and speed of these initiatives. The gold-to-copper ratio fell to 3.52, a level last seen in 2020. LME copper trades around USD 9,450 per ton. As China consumes 50% of the global copper supply, the falling gold-to-copper ratio signals economic distress and high uncertainty, which supports gold prices through concerns regarding fiscal profligacy and incoming US interest rate cuts. Prices fell sharply. The copper rally is a dead cat bounce.
China sets aggressive growth targets
The government aims for a GDP growth target of 4.5 to 5 percent this year. Finance Minister Lan Fo’an expects fiscal expenditure, new government bond issuance, and central transfers to reach record highs. Total investment in infrastructure, power grids, computing power, education, and health care will exceed 7 trillion yuan. A 250 billion yuan fund supports consumer goods trade-in programs. Another 100 billion yuan supports private investment and consumer spending. Nearly 1.3 trillion yuan supports science and technology development, representing a 7.1 percent increase from 2025. AI-related industries will exceed 10 trillion yuan by the end of the 15th Five-Year Plan period. Six emerging pillar industries, including integrated circuits, the low-altitude economy, and intelligent robots, will surpass 10 trillion yuan in 2030. High-tech manufacturing drove 26 percent of industrial growth last year.
The policy shift targets 5% growth.
Australian dollar correlation with copper
The Australian dollar trades with a 0.89 correlation to COMEX copper futures. The correlation between AUD/USD and USD/CNH is -0.87. AUD/USD broke through resistance at 0.6550. RBA Governor Michele Bullock noted a 0.6% core inflation forecast for the September quarter. Implied pricing for a November rate cut fell to 37%. Demand stays low.
Aussie is a proxy.
The Australian dollar moves with macro sentiment and trade optimism. Michele Bullock stated the board needs more data before deciding on policy moves. A 0.9% rise in core inflation is a material miss against the 0.6% forecast. The median view for the quarterly trimmed mean inflation rate is 0.8%. You should monitor the 0.6625 resistance level.
Real estate contraction drags industrial demand
China’s real estate development investment totaled 3,035.6 billion RMB from January to May 2026, a 16.2 percent year-on-year decrease. Residential investment was 2,342.6 billion RMB, down 15.6 percent. The floor space under construction was 5,487.75 million square meters, a 12.3 percent decrease. Residential floor space under construction was 3,808.30 million square meters, a 12.6 percent decrease. New construction starts totaled 179.29 million square meters, a 22.6 percent decrease. Residential new starts were 130.84 million square meters, a 23.4 percent decrease. Completed floor space reached 140.87 million square meters, a 23.4 percent decrease. Residential completions were 99.99 million square meters, a 25.0 percent decrease. Copper consumption in the real estate sector was 939.7kt, a 2.38 percent year-on-year decline.
Mining supply constraints
Mining supply remains tight. Chile’s Escondida mine produces 15% of global copper. BHP expects Escondida to produce 1.2 million tonnes. A strike at Escondida is certain. LME copper stocks provide two days of global supply. Chinese bonded warehouse stocks fell to 37,000 tonnes in September. Russia produces 920,000 tonnes of refined copper. Nornickel produces 406,841 tonnes.
The global market faces supply pressure. LME consultation on Russian metal creates uncertainty. Workers at Chuquicamata, a Codelco mine with 330,000 tonnes of output last year, down tools. China accounts for 50% of global copper smelting capacity. Smelter fees fell to USD 0 per tonne in 2026.
Trading the commodity divergence
The RBA cash rate was 3.85% after the February 2026 hike. Inflation rose 3.8% in the second half of 2025. Michele Bullock noted that a 0.9% rise in core inflation is a material miss against the 0.6% forecast. The median view for the quarterly trimmed mean inflation rate is 0.8%. Implied pricing for a November rate cut is 37%. The AUD/USD broke through resistance at 0.6550. Traders target 0.6625 and 0.6700 as potential options. Will the RBA pivot before the next inflation report?