Domestic Copper Consumption gradually Recovered as Expected

SHANGHAI, Mar 17 (SMM) -  In February, although the recovery of consumption in the copper industrial chain was slower than expected and the US dollar continued to strengthen, the release of supportive macroeconomic policies in China still kept the most active SHFE copper contract at high levels. The recent economic data released by the United States was still strong. In January, US retail sales rose 3%, far exceeding market expectations of 1.8%, and consumption still proved resilient. Annualised CPI in the US recorded 6.4% in January, and inflation did not cool as much as expected.

In addition, the US Markit composite PMI recorded 50.2 in February, indicating that the US economy expanded in the month. The economic data released in February meant that the previous market expectations for the Fed to continue to slow down interest rate hikes would fail to materialise. This, combined with the Fed's persistent hawkish stance, pushing up the US dollar index to breach the 105 mark, limiting the increase in copper prices. In the eurozone, the inflation failed to drop as expected, and the European Central Bank is still expected to raise interest rates by 50 basis points in March. Therefore, the euro cannot contain the rise in dollar in the short term. China has issued additional favourable policies.

In order to improve the asset-liability structure of real estate companies, the China Securities Regulatory Commission initiated a pilot project for real estate private equity investment funds, and also encouraged foreign investors to invest in real estate private equity investment funds in the form of Qualified Foreign Limited Partnership (QFLP). In January, China's new order index was 50.9%, with the PMI of key industries such as high-tech manufacturing and equipment manufacturing rising to varying degrees. The level of prosperity improved; the non-manufacturing business activity index was 54.4%, returning to the expansion range, and once again boosted market expectations for China's economic recovery. In China, the recovery of consumption in February missed expectations, as new downstream orders were limited. Most processing companies saw a slow decline in finished products inventories. The most active SHFE copper contract fluctuated between 67,500-70,500 yuan/mt in February.