Copper hit a three-month high as it headed for its biggest monthly advance since January 2023, supported by growing optimism over Chinese demand and mounting supply risks in Chile.

On the demand side, Beijing’s leadership has promised more support for the real estate sector and a reduction in the local-government debt burden, which are expected to boost the need for commodities in the top metals consumer. While authorities have stopped short of any “big-bang” stimulus, officials said July 31 they are studying more support policies to drive the consumption of electric vehicles, which are a major emerging driver of copper demand.

Signs of slowing inflation in the U.S. have also boosted sentiment across financial markets in July as investors bet that the Federal Reserve could soon bring its aggressive campaign of rate hikes to a close. Chicago Fed President Austan Goolsbee said July 31 that data showing slower U.S. inflation is “fabulous news,” but he hasn’t yet decided on whether to support pausing rate increases.

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Supply risks were also in focus after Chilean copper mining giant Codelco lowered its annual production guidance and raised cost estimates July 28 after another disappointing quarter. Official data from Chile’s statistics agency July 31 showed national copper production rebounded month on month in June but was down 0.9% from 2022.

The decline at Codelco was driven by a “notably weak performance” at its Chuquicamata, Ministro Hales and El Teniente mines, BMO Capital Markets analyst Colin Hamilton said in an emailed note. “While this shows a broader industry trend where mining companies continue facing operational challenges, Codelco’s situation is unique.”

Copper rose as much as 1.8% to $8,821 a ton on the London Metal Exchange, the highest level since April 21, and was trading at $8,815.00 as of 4:22 p.m. local time. It’s up about 6% in July.

In other metals, zinc rallied 2.8% after an increase in orders to withdraw metal from warehouses tracked by the LME. Other contracts were mixed, with aluminum rising 2.1% while nickel fell 0.4%.