The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 2,049 tonnes day on day to 20,229 tonnes on June 26, leading to a week-on-week decrease of 9,773 tonnes or 32.57%, and a decrease of 22,672 tonnes or 52.85% month on month.
SHFE copper price fell to about Yuan 68,500/tonne today, while premiums of refined copper in East China fell by Yuan 100/tonne.
Copper prices fell today mainly due to the expectation of the Federal Reserve to raise interest rates and the LME (London Metal Exchange) copper price decline during the holiday. Federal Reserve Chairman Powell once again emphasized his determination to raise interest rates twice more in 2023, leading to a shift in market expectations from previous optimism to relative caution.
The manufacturing industry Purchasing Managers' Index (PMI) of the eurozone in June unexpectedly fell to 43.6, while the Bank of England raised interest rates by 50 basis points beyond expectations. Besides, the market turned risk aversion to geopolitical crises in Russia, thus, copper prices weakened in recent few days.
LME and SHFE copper futures inventory decreased by 1,100 tonnes and 2,049 tonnes to 79,300 tonnes and 20,229 tonnes respectively, while LME copper cancelled warrants promotion rose to 62.01%, indicating the short squeeze risks in the markets.
The continuous depreciation of the CNY and the tight supply of refined copper in China are also factors limiting the decrease in copper prices, leading to a relatively mild decline in SHFE copper prices today.
According to Mysteel's survey, the capacity utilization rates of refined copper rod and secondary copper rod processing enterprises in China decreased by 1.48 and 5.27 percentage points respectively week on week. The decline reflected the off-season factors of consumption, but it was mainly suppressed by the holiday impact and the approaching of the end of the half year.
In the situation where LME (London Metal Exchange) copper cancelled warranties promotion has risen again to a high level and domestic inventory remains at a low level, the space for copper price decline will be limited. The resilience of demand and the shift in macroeconomic expectations are jointly influencing copper prices which are expected to fall moderately in the short term.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com
