The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 4,467 tonnes day on day at 4,264 tonnes on September 27, leading to a week-on-week decrease of 11,108 tonnes or 72.26%, and a decrease of 3,997 tonnes or 48.38% month on month.
SHFE copper price fell to about Yuan 67,200/tonne today, while premiums of refined copper in East China fell by Yuan 95/tonne.
The Consumer Confidence Index in the US fell from 108.7 in August to 103 in September, marking the second consecutive month of decline. American consumers are troubled by the current political situation and high interest rate environment in the US and are bearing the impact of significantly rising goods prices, especially food and gasoline.
According to Bloomberg, 80% of American households have lower savings than before the epidemic. The excess savings brought about by quantitative easing are likely to have been depleted in the third quarter.
Goldman Sachs believes that hawkish expectations for the Federal Reserve to raise interest rates, as well as recent unstable factors, may lead to a significant recession. Once risk concentration erupts, copper prices may plummet like every time in history.
According to Mysteel's survey, China's refined copper transactions have almost come to a standstill this week. The smelters stated that the current supply is relatively loose, while downstream demand has not reached the level of previous consumption peak seasons.
Almost all domestic real estate stimulus policies have been released. After all market expectations are fulfilled, if the actual improvement is not ideal, it may suppress market confidence. The growth in demand for new energy vehicles and grid investments will partially support copper prices in the fourth quarter.
According to Mysteel's survey, China's refined copper social inventory will gradually accumulate from October, as consumption growth will be slower than output growth. The average monthly total output is expected to exceed 1 million tonnes in the fourth quarter.
Overall, resilient overseas inflation and a high interest rate environment suppress copper prices. Adequate supply and cautious demand by market participants will limit the rising potential for copper prices. As the risk of overseas recession gradually emerges, the risk of a sharp drop in copper prices is accumulating.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com