SHANGHAI, Jun. 13 (SMM) – Copper prices have been in a downward track from mid-February. Prices rose over 4% last week after a string of news, including better-than-expected import and export data from China, 498 billion yuan in medium term lending facility by the People’s Bank of China (PBOC), falling copper inventories and interruption of copper ore supplies. Market sentiment is cautious this week since the Fed, Bank of Japan, Bank of England and Swiss National Bank are about to announce their interest rate decision. In this scenario, SHFE July copper closed at 45,760 yuan per tonne on June 13, a drop of 1.06%.
How will Fed’s policy meeting affect copper prices? An SMM interview reveals some takes about this issue.
Most market participants expect a Fed interest rate hike is in the cards. The US dollar and copper prices will be vulnerable to the range of a possible rate hike and Fed’s statement about economic outlook.
Vice-General Manager Jing Chuan from Zhongda Futures said the Fed will raise interest rate at its June policy meeting. The market has absorbed this news. Copper prices are expected to face some pressure based on the past rate hikes, but will rise after rate hike.
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Copper prices will be affected only limitedly unless the Fed does not raise interest rate in June or the interest rate increase turns out to be more significant than the 0.25 basis points expected, said Liu Tianyu from Luzheng Futures. Fed Chairwoman Janet Yellen’s statement about interest rate hike pace in the second half of the year will draw more attention.
Despite an interest rate hike by the Fed is very possible at its June policy meeting, the Fed may not use very dovish tone toward future interest rate increase, said Xu Maili from Everbright Futures. The US dollar index may move weakly after the rate hike, and give some support to copper in the near term.
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