The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 502 tonnes day on day to 45,456 tonnes on May 23, leading to a week-on-week decrease of 16,210 tonnes or 26.29%, and a decrease of 22,544 tonnes or 33.15% month on month.
SHFE copper price fell to about Yuan 64,500/tonne today, while premiums of refined copper in East China remained unchanged today.
The still-uncertain macroeconomic situation in the US led to a sharp drop in non-ferrous metal prices today. On the one hand, after the viewpoint revealed yesterday by Federal Reserve Chairman Powell temporarily alleviated market concerns, St. Louis Fed Chairman James Bullard stated that they may have to raise interest rates two more times this year to curb persistently high inflation. On the other hand, the discussion between the US government and Congress on the debt ceiling has not made any substantial progress, raising concerns among market participants about a default on US sovereign debt. According to Goldman Sachs' prediction, the US Treasury's cash reserves are likely to run out before June 9th, while the possibility of an agreement to raise the debt ceiling not being reached by the deadline is 25%. Influenced by pessimistic expectations from several sides, the yield of US treasury bonds rose significantly, curbing commodity prices.
The combination of fundamental bearishness and macroeconomic factors led to a further decline in copper prices. Most copper semis processing enterprises and end-users in China are reducing production due to high costs and weakening downstream consumption. Due to copper import profit, increased imported copper supply has sparked market concerns about future prices and spot premiums, leading most downstream enterprises to remain cautious and more inclined towards consuming finished product inventory rather than restocking raw materials.
In summary, the current copper price is mainly affected by changes in market expectations caused by macroeconomic events, fluctuating within the current range. However, it is difficult for copper prices to receive fundamental support during the traditional off-season of consumption from May to June, and it is expected that copper prices will run low in the short term.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com