The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures rose by 1,225 tonnes day on day to 29,997 tonnes on December 30, leading to a week-on-week increase of 3,815 tonnes or 14.57%, and a decrease of 1,436 tonnes or 4.57% month on month.
The Bank of Japan allowed the floating range of 10-year bond yield to expand by 25 basis points, which led to a sharp rise in the exchange rate of JPY/USD and a decline in the US dollar index, which supported copper prices.
However, the rapid speed of COVID spread seems to be beyond people's expectations. It is expected to take another two months for China to pass the first peak of COVID infections, thus, the economy may recover slowly in short term.
Due to the approaching of the Spring Festival and sluggish consumption, many downstream customers began to take holidays in succession, which led to a continuous decline in demand. Besides, China's refined copper social inventory rose by 3,800 tonnes to 93,800 tonnes week on week on December 29, according to Mysteel.
Therefore, the current rise may not be sustainable. Especially before the Spring Festival, copper prices are expected to weaken and fluctuate in the range of Yuan 64,500-67,000/tonne recently.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com