The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 503 tonnes day on day to 42,427 tonnes on June 6, leading to a week-on-week increase of 399 tonnes or 0.95%, and a decrease of 17,182 tonnes or 28.82% month on month.
SHFE copper price rose to about Yuan 66,700/tonne today, while premiums of refined copper in East China rose by Yuan 15/tonne today.
According to the US Treasury Department, its cash surplus on hand has fallen below a dangerous level of $23 billion as of June 1, while it expects to increase its cash surplus to $550 billion by the end of this month after not being constrained by the debt ceiling. Market participants even predict that the US Treasury's further debt scale may exceed $1 trillion in the coming months. Bloomberg believes that the continued interest rate hikes by the Federal Reserve may have a greater negative impact on the financial industry than expected, as well as the significant amount of liquidity that the Treasury will extract from the market to replenish its cash reserves. According to the Institute for Supply Management (ISM) in the US, the Purchasing Managers' Index (PMI) for non-manufacturing industries in the US fell to 50.3 in May from 51.9 in April. The weak growth in the service industry has strengthened market expectations for unchanged interest rates in June, temporarily pushing up copper prices.
China's copper concentrate TC continued to rise to $90/dmt. China's refined copper social inventory increased by 1,700 tonnes week on week to 116,800 tonnes this week. With the rise of copper prices, the shortage of copper scrap in China began to improve, which will alleviate the pressure on the supply side. LME (London Metal Exchange) copper futures inventory increased to 98,900 tonnes, while the proportion of off-warrants increased to 27.67%, mainly occurring in Busan warehouses. With the delivery in LME, more spots will be shipped to China. However, according to Mysteel's survey, the overall capacity utilization rate of Chinese copper semis processing enterprises slightly increased in May, indicating that downstream demand is continuously improving.
In summary, the impact of macroeconomic factors is relatively uncertain. The loose supply and slight improvement in demand will make it difficult for copper prices to get a trend, and copper prices are expected to fluctuate around the current level.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com
