The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 1,670 tonnes to 4,307 tonnes on January 2, leading to a week-on-week increase of 1,829 tonnes or 73.81%, and an increase of 1,635 tonnes or 61.19% month on month.
SHFE copper price fell to about Yuan 69,000/tonne today, while premiums of refined copper in East China rose by Yuan 85/tonne.
Based on the ideal performance of current US macroeconomic data and unemployment rates, more and more market participants tend to believe that the US economy will achieve a "soft landing". However, the balance of US household debt and credit card debt continued to soar in the second half of 2023, even reaching the largest increase rate since statistics began in 1999. The economic pressure within the US may be overshadowed by macroeconomic data compiled using special methods and rapidly declining inflation.
Former US Treasury Secretary Summers warned that investors are probably underestimating inflation risks and are overly optimistic about the Federal Reserve's monetary easing space.
According to the National Statistical Institute of Chile (INE), Chile's copper output in November decreased by 3.1% year on year to 444,905 tonnes. However, Pacheco, Chairman of the CODELCO Board of Directors, pointed out that the company's annual decline in output will be reversed starting in 2024.
Copper rod processing enterprises in some parts of North China have been forced to reduce production due to environmental protection factors. The recovery time will depend more on the specific environmental improvements, but some enterprises are expected to resume production gradually starting from January 4. According to Mysteel's survey, this event has a limited impact on refined copper demand, particularly as the production of large processing enterprises has remained relatively stable.
According to Mysteel's survey, China's refined copper social inventory surged by 15,200 tonnes to 66,100 tonnes week on week today, and there are still expectations of sustained import copper customs clearance in the short term. Combined with the weak demand during the off-season, the overall domestic inventory is expected to continue to rise.
Overall, copper prices, and even most non-ferrous metal prices, are expected to fall in the short term after sustained increases boosted by macroeconomic factors. From a historical perspective, current economic data indicates that the economic cycle is in an early recession, so copper prices face a higher probability of a sharp decline in 2024, followed by a gradual rebound due to supply shortages. Meanwhile, China's economic resilience will support overall demand and enhance the bottom of copper prices.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com