In another hint that inflation may finally be easing, the producer price index for October — which is how much businesses pay for the goods and services they buy so they can do business — increased by just two-tenths of a percentage point. That’s less than forecasters were expecting.

Year on year, producer prices were up 8%, which is the lowest annual number since July 2021. The cost of services actually fell a tenth of a point — the first time that’s happened since November 2020. And the cost of core goods — everything except food and energy — slipped by the same amount.

On the whole, that looks like a bunch of good news.

But one category of producer prices has been rising rapidly: industrial metals. U.S. copper futures recently recorded their largest one-day percentage gain in more than a decade. Zinc, tin and aluminum are getting more expensive again too.

It’s all because traders are wagering that China may finally be emerging from the pandemic rules that have held its economy back and that Chinese companies will soon buy up industrial metals and accelerate production.

In investment circles, there’s a term for one industrial metal’s ability to predict the overall health of the economy. Traders call it Dr. Copper, per Matthew Miller at CFRA.

“Copper has been traditionally thought of as just a cyclical commodity, really diagnosing the economy. Often moving before or, you know, it’ll be a leading indicator,” he said.

So, copper’s recent price increase suggests the global economy is headed for good times. Higher prices also imply that the dollar may finally be weakening.

“Typically, there’s an inverse relationship between the dollar and industrial metals,” said Bob Iaccino, co-founder of Path Trading Partners. 

And sure enough, as metal prices have climbed, the yen, pound and euro have rallied against the dollar. On the other hand, Iaccino said the surge in copper prices might signal that more inflation is on the way.

“We’ve seen about a 12% rally in the price of copper,” he said. “Does that mean that PPI is likely to be stronger next month and bleed into PPI the following month? Yes. It is likely to mean that, if it sustains.”

And it’s likely to sustain if China’s economy manages to get back into high gear. The country is the world’s largest consumer of industrial metals by a long shot. 

Once China is back to buying as much metal as it did before the pandemic, don’t expect prices to come back down, said Chris Bataille at Columbia University.

“It’s a bit of a fixed supply, like we’re stuck with the supplies we have today. There’s a very strong signal out there right now to increase that supply for a lot of these critical minerals,” he said.

But it’s going to be at least a few years before any new mines come online, Bataille added. And that’s if the investment happens immediately.