The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 3,485 tonnes day on day to 115,862 tonnes on March 16, leading to a week-on-week decrease of 13,260 tonnes or 10.27%, and a decrease of 4,702 tonnes or 3.90% month on month.
SHFE copper price plunged to about Yuan 66,400/tonne today, while premiums of refined copper in China's main markets rose by Yuan 50-90/tonne from yesterday. Following the successive bankruptcies of the US banking industry, the shares of Credit Suisse also suffered a panic selling, triggering further panic in the market sentiment. The US PPI fell 0.1% month on month in February, far below market expectations. While US retail sales data fell 0.4% month on month in February, indicating that the Federal Reserve's interest rate hike has significantly inhibited economic operation. Copper prices fell sharply due to market pessimism today.
Compared with the uncertainty of copper prices caused by the overseas macro economy, physical transactions in China improved significantly. The huge decline in copper prices stimulated downstream producers to restock and drove spot premiums up in China's major markets. In addition, China's copper imports have shifted to a slightly profitable state with a greater decline in LME (London Metal Exchange) copper prices. Refined copper import is expected to increase in March and bonded warehouse inventory will begin to fall.
To sum up, the temporary decline caused by short-term risk aversion will be repaired by the lower expectation of interest rate increase and the continuous improvement of China's demand.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com