The Shanghai Futures Exchange's (SHFE) warehouse warrants for copper futures decreased by 276 tonnes day on day to 4,959 tonnes on November 20, leading to a week-on-week increase of 3,903 tonnes or 369.6%, and a decrease of 6,460 tonnes or 56.57% month on month.
SHFE copper price remained stable at about Yuan 67,900/tonne today, while premiums of refined copper in East China rose by Yuan 45/tonne.
New credit and real estate stimulus policies have been proposed in China. The Sino-US meeting sent an optimistic signal to the market, supporting market expectations for an improvement in macroeconomics.
Federal Reserve officials continued to maintain a hawkish stance, claiming that further interest rate hikes are not ruled out due to the high inflation that has not yet been fully improved. However, investors have fully traded based on the expectation of the end of the monetary tightening cycle. Even so, the rise in copper prices is very limited.
According to overseas research institutions, it is expected that global copper supply will show a surplus because of the advanced increase in output in 2024 and 2025, then gradually shift towards shortage after 2026 due to the sustained development of the new energy industry demand.
At present, mainstream market participants hold divergent views on the 2024 copper concentrate price TC/RC, but most of them believe that the final agreed TC will be slightly lower than last year's $88/dmt. This reflects the long-term expectation of a tight supply of copper concentrate.
On the other hand, China's refined copper social inventory increased by 6,000 tonnes to 59,800 tonnes week on week this week, shifting the downward trend. LME copper futures inventory accumulated to over 180,000 tonnes despite more spots being exported to China.
The current consumption of China's power grid and power infrastructure supports the main demand for copper. Consumption from real estate and its post cycles still faces severe pressure. The degree of improvement in consumption during the debt deleveraging cycle needs to be verified.
Overall, current market participants tend to trade under the expectations of the Federal Reserve's interest rate cut, while the potential risks of economic recession are often excessively overlooked. Copper prices are mainly affected by the macroeconomic situation and overseas consumption. The continuity of domestic consumption improvement still needs to be verified. Copper prices are facing greater pressure.
Data Source: SHFE
Data Source: SHFE
Written by Edenlis Huang, email@example.com
Edited by Paula Xu, firstname.lastname@example.org