Concerns over Interest Rate Hikes Weighed On Copper Prices

LME copper prices closed at $8,868/mt in overnight trading, a decline of 1.66%. Trading volume was 16,000 lots and open interest stood at 244,000 lots. The most active SHFE 2303 copper contract finished at 68,240 yuan/mt overnight, down 0.89%. Trading volume was 38,000 lots, and open interest stood at 141,000 lots.

On the macro front, U.S. retail sales data was stronger than expected, boosting market expectations that the Federal Reserve will keep monetary policy tight for some time to combat inflation. In terms of fundamentals, Guangdong's inventory has fallen for two consecutive days, but the decline is limited due to the small amount of outbound shipments. At present, the 2023 annual long-term orders have begun to be implemented. Available goods in the market are adequate. Affected by the continued rise of copper prices and the delivery of the front-month copper contract on SHFE, traders and downstream manufacturers refrained from restocking, muting trades.

Although consumption has gradually recovered, end-user enterprises mostly restocked on demand due to the impact of high copper prices. Due to the macro factor and market optimism over a turnaround in the market, it is expected that copper prices will remain rangebound.