Metals traders arriving in London for LME Week were in for a surprise as they caught up with friends and customers from China.

For the last couple of years, the biggest consumer and producer has been a buzzkill for metals bulls — but now suddenly Chinese representatives were among the most bullish in any room.

In both private conversations and public forums, many market insiders who have spent their careers observing the Chinese economy said they believe the latest stimulus plan unveiled last week is of great political significance — representing a shift by Xi Jinping to once again place economic development among the government’s top priorities.

Chinese equities have already rallied by the most in more than a decade, while iron ore — one of the commodities most exposed to the fluctuations of the Chinese real estate market — has soared by more than 20%. As the biggest annual gathering on the metals calendar starts winding up for the year, several senior metals traders said they had not seen their Chinese counterparts so optimistic since before the coronavirus pandemic.

“There are decades where nothing happens; and there are weeks where decades happen,” Amelia Fu, head of global commodities strategy with at Bank of China International, quoted Vladimir Lenin at an LME week event. “We see a momentum week last week with unprecedented policy measures released. I really believe this is a time when there is significant, fundamental changes in the market. We are going to see a major game changer coming up.”

At one private lunch early in the week, an attendee recounted how traders and analysts around the table took turns expressing their largely downbeat views on metals. That was, until the conversation landed on the Chinese executive present — the rest of the group was taken aback to be told they had overlooked the importance of the policy shift in China.

STILL CAUTIOUS

To be sure, many — including some senior Chinese metals executives — are still cautious of becoming overly bullish in the short term. Visible inventories of metals like copper and aluminum have risen significantly this year. And Chinese new year falls relatively early, meaning there are only a few weeks left before the major buyer of metals starts to wind down for the holiday season. And it will likely take time for improved Chinese sentiment to translate into higher real demand for metals.

Still, after the stimulus measures including interest-rate cuts, freeing up of cash for banks, liquidity support for stocks and easing home-buying curbs, there were already positive indicators. In China’s southern city of Shenzhen near Hong Kong, Bloomberg has reported that some homebuyers scouted showrooms at midnight after the least affordable region of the country eased rules to let residents purchase more properties.

Data published by state news agency Xinhua, citing China State Railway Group, showed that China has seen 21.4 million railway trips on the first day of the Golden Week holiday starting in October, a record high for a single day.

If the Chinese living in urban areas begin to see an economic recovery, particularly in the property sector, there is plenty of potential for additional growth, Linda Yueh, an adjunct professor of economics at London Business School, said at an LME Week event.