The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures rose by 777 tonnes day on day to 12,855 tonnes on December 18, leading to a week-on-week increase of 10,456 tonnes or 435.85%, and an increase of 7,620 tonnes or 145.56% month on month.
SHFE copper price decreased to about Yuan 68,600/tonne today, while premiums of refined copper in East China rose by Yuan 100/tonne.
After the Federal Reserve's argument about monetary policy suddenly changed dovish last week, New York Fed Chairman Williams pointed out that it is too early to consider interest rate cuts in March 2024. Atlanta Fed Chairman Bostic believes that the Federal Reserve will carry out twice the 25 basis point rate cuts from the third quarter of 2024, which is lower than the 75-150 basis points generally expected by the market.
The suppression of optimistic investor expectations by Federal Reserve officials has pushed up the US dollar index, putting pressure on copper prices.
Both domestic industrial added value and fixed assets investment have achieved year-on-year growth, and the growth rate is accelerating. Meanwhile, real estate development investment in China decreased by 9.4% year on year in January-November 2023.
The expectation of tight copper supply still supports copper prices, and if LME copper prices stabilize above $8,500/tonne, it may have stronger upward momentum in the short term. But investors are waiting for the new expected data to be released by the International Copper Study Group (ICSG) next week.
LME and COMEX copper futures inventory fell by 2,525 tonnes and 197 tonnes to 175,550 tonnes and 16,788 tonnes respectively on December 15. According to Mysteel's survey, China's refined copper social inventory increased by 5,800 tonnes to 73,100 tonnes week on week on December 18, mainly because of deliveries from smelters. The overall global copper inventory remains balanced, while domestic inventory has not yet experienced the expected surge.
According to Mysteel's survey, although the overall operating rates of domestic copper rod and copper strip processing enterprises gradually weaken as the end of the year approaches, the demand for copper tubes and copper bars is once again boosted by the consumption of refrigeration accessories. The overall demand for refined copper remains weak, but seasonal fluctuations are not such significant.
Overall, the expected overseas interest rate cuts have limited support for copper prices. However, the risk of economic recession cannot be ignored. The intensification of supply-side interference will support copper prices in the short term.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com
