The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures fell by 401 tonnes to 3,058 tonnes on January 5, leading to a week-on-week decrease of 2,919 tonnes or 48.84%, and an increase of 285 tonnes or 10.28% month on month.
SHFE copper price fell to about Yuan 68,500/tonne today, while premiums of refined copper in East China rose by Yuan 100/tonne.
The US ADP employment in December surged to 164,000, far exceeding expectations of 125,000 and the previous 101,000. In addition, the growth rate of employment wages in the US slowed down in December, with year-on-year growth rates of in-service and job-hopping wages dropping to 5.4% and 8% respectively, reaching a new low since May 2021, but still higher than inflation levels. The number of people of Initial Jobless Claims in the US last week lowered to 202,000, below the expected 216,000.
The pressure from the wage-price spiral will hinder the mitigation of the high inflation, so US bond yields and the US dollar strengthened today after the data was released.
Buenaventura Mining claims to continue expanding investment in copper mining projects in Peru and overseas over the next five years, and the abundance of copper deposits in Peru is worth an optimistic estimate.
According to Mysteel's survey, China's imported copper concentrate TC plummeted to $53.7/dmt on January 4. The obstacles to the supply side gradually emerge in the short term due to overseas geopolitical crises and disruptions in copper mining production. However, China's copper scrap import losses continue to narrow, coupled with the recent loose domestic supply performance, which will form a stronger substitute for refined copper supply.
According to Mysteel's survey, China's refined copper social inventory and bonded area inventory rose by 5,700 tonnes and 700 tonnes compared to the previous week to 70,600 tonnes and 8,000 tonnes, respectively. The main reason is the sustained delivery of imported copper and the sluggish demand for refined copper domestically. The interference in overseas copper mines has not yet been reflected in the refined copper side.
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. However, the decline will not be as significant as in history due to supply shortages and inflation factors.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com