The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 10,713 tonnes day on day to 97,416 tonnes on March 20, leading to a week-on-week decrease of 19,942 tonnes or 16.99%, and a decrease of 33,870 tonnes or 25.80% month on month.
SHFE copper price fell to about Yuan 66,800/tonne today, while premiums of refined copper in China's main markets generally fell by Yuan 20-50/tonne from last Friday. Recent macroeconomic risks in Europe and the US continued to suppress market sentiment and prices of nonferrous metals. Market participants were bearish about the economy and demand expectations, leading to a decline in copper prices driven by short-term risk aversion. According to data released by the Federal Reserve, the total assets of the Fed increased by US $297 billion from March 8 to 15 due to the increase of short-term loans to banks. The interest rate target expectation in the market for the end of 2023 quickly fell from 5.6% to 3.6%, implying an easing expectation for the second half of the year.
The sharp decline in copper prices has stimulated copper demand in China. According to Mysteel's survey, after the end of contract rolling last week, both raw material procurements and orders received from Chinese copper semis processing enterprises have significantly improved. Although many market participants were still bearish on copper prices, they did not hinder their enthusiasm for preparing raw materials for the peak season.
In summary, the current copper prices weakened due to macroeconomic risks, but with the loose expectations for interest rate hikes and the realization of demand in China, copper prices will be supported.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com