Copper prices continued increasing in futures and spot markets on August 5, as signs of improvement in the U.S.-Iran conflicts led to a recovery in market risk appetite. Meanwhile, expectations of Federal Reserve rate increases have cooled slightly recently, resulting in weakening U.S. dollar index and providing support for copper prices.
China's refined copper trading slightly decreased on August 5, mainly due to mediocre downstream consumption amid the current demand off-season and elevated copper prices. Spot premiums generally dropped across major markets, except for Guangdong, where low inventory supported holders' willingness to keep prices firm. Under constrained supply and the backwardation structure in near-month futures contract spread, spot premiums in China are expected to stay relatively elevated before this month's contract rollover.
Regarding copper scrap, though available market supply slightly increased as rising copper prices boosted scarp trading profit, downstream processors' stockpiling was sluggish due to constrained orders.
Trading in China's copper semis markets stayed generally weak on August 5. While refined copper rod orders slightly increased as some end-users purchased in fear of future price increases, other semis generally saw falling orders due to limited demand growth during the current demand off-season. In the near term, China's copper consumption will remain supported by firm end-user demand based on rigid needs, with notable increases unlikely.
