The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 3,524 tonnes day on day to 16,189 tonnes on July 28, leading to a week-on-week decrease of 15,454 tonnes or 48.84%, and a decrease of 4,016 tonnes or 19.88% month on month.
SHFE copper price rose to about Yuan 69,100/tonne today, and premiums of refined copper in East China rose by Yuan 90/tonne.
Ministry of Housing and Urban-Rural Development released a statement that further implements policies and measures such as reducing the down payment ratio and loan interest rate for the purchase of the first home, tax exemptions for property replacement, and "recognizing houses without loans" for personal housing loans. These policies stimulated market sentiments and pushed copper prices and the A-share index higher.
The European Central Bank held a monetary policy meeting on July 27 and decided to raise key interest rates in the eurozone by 25 basis points, slightly lower than market expectations, leading to a recovery in commodity prices. However, European Central Bank President Lagarde stated that the economic outlook for the eurozone is showing a deteriorating trend, and inflation is likely to remain high for a longer period. The main reason is that the tightening of financing conditions has suppressed the manufacturing industry and domestic demand.
In addition, Germany's manufacturing PMI fell to only 38.8 in July, far lower than expected, which means its "deindustrialization" and recession risk. This data also brings pessimistic expectations for the eurozone and even the global economy.
The US banking regulatory authorities have announced an increase in the capital ratio of large US banks to 16-19%. This measure is widely believed by the market to exacerbate cash flow shortages and non-performing loan ratios in the financial industry, thereby accelerating the process of economic recession.
Due to copper import losses and maintenance of several smelters, China's copper social inventory continued to fall this week, dropping from a peak of 127,400 tonnes to 102,200 tonnes this week.
However, downstream demand has been largely suppressed by high copper prices. As the high temperature gradually fades away, the demand for raw materials in the refrigeration industry will weaken. According to Mysteel's survey, major Chinese copper processing enterprises showed less optimism about the capacity utilization rate in the third quarter.
Macroeconomic expectations are expected to impose a limited impact on copper prices in the short term. However, LME (London Metal Exchange) copper futures inventory, which is still at a low level, as well as declining Chinese copper social inventory and SHFE warehouse warrants, will support copper prices. It is expected that copper prices will fluctuate within the range of Yuan 66,500-69,500/tonne.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Ting Ao, aoting@mysteel.com