In the eurozone, the inflation rate is still sticky, and interest rate hike will continue for a while. The euro will continue to suppress the rise of the dollar. Financial report released by the People’s Bank of China showed that China's economic development faces triple pressures of demand contraction, supply expansion, and an expected downturn. The recently released social financial data and CPI data confirm the current situation of domestic weak economic recovery. The domestic endogenous consumption power is insufficient, and it is difficult to provide power for the upward movement of copper prices.
Fundamentally, the disruptions to copper concentrate supply has weakened. The SMM Imported Copper Concentrate Index continued to rise, ensuring copper cathode production in the future. In addition, the import window reopened, leading to inflows of imported copper. The weekly operating rates of copper cathode rod makers and secondary copper rod makers recorded a rebound, and the spot premiums in various regions widened significantly, indicating that consumption remained resilient when copper prices were running at low levels, but the continuity of orders is not optimistic. The large destocking rate last week is mainly due to the low copper price, which stimulates the release of demand. It is worth noting that new orders decreased significantly when copper prices rebounded during the week, indicating that endogenous consumer demand is limited.
Although the liquidity risk of overseas banks continues to ferment, the debt ceiling issue is developing for the better. In addition, recent overseas economic data show that the overseas economy is resilient, and the fear of economic recession has declined. However, the US will maintain a relatively high interest rate level for a period of time as the Fed's interest rate meeting is approaching. The US dollar index tends to rise and continue to weigh on copper prices. Domestic financial reports show that China is currently in a weak recovery stage, with limited domestic consumption. However, when copper prices are running at low levels, the downstream replenishment is acceptable, which will provide some support for copper prices in the short term. The most active SHFE copper contract prices are expected to move between 63,500-67,500/mt this week, and LME copper will trade between $8,150-8,650/mt. In the spot market, the current inventory is at a low level, and the spot premiums and discounts in various places were improving, indicating that the decline in copper prices will release some consumer demand, but we need to be alert to the impact of the inflow of imported copper and the outflow of delivery warehouse receipts on the spot premiums and discounts this week. Weekly spot premiums will range from 150-300 yuan/mt.
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