Copper prices still had support at high levels

The US dollar index rose slightly after the Bank of Japan's interest rate hike, and copper prices retreated slightly but still had strong support at the 5-day moving average. The Federal Reserve on Thursday left interest rate unchanged as expected by the market. The probability of an interest rate cut in May is still low, but the latest dot plot indicates that there is a possibility of three interest rate cuts during the year; the US dollar rolled back its gains at the beginning of the week and fell to 103. However, the Swiss National Bank's earlier-than-expected interest rate cut caused the Swiss franc to fall against the US dollar, and the US dollar rose again. British inflation fell to its lowest level in nearly two and a half years in February. The market expects that UK may delay the first interest rate cut.

In the Chinese market, the total retail sales of consumer goods from January to February was 8.1307 trillion yuan, a year-on-year increase of 5.5%. The A-share market performed impressively, rising to 3,100 during the week. On Thursday, Xuan Changneng, deputy governor of the People's Bank of China, said that the statutory deposit reserve ratio still has room to decline; domestic macroeconomic sentiment ensured copper prices to stabilise at a high level. Expectations over production reduction by Chinese smelters is still the recent support for bulls. However, high copper prices have once again impacted spot consumption. The spot trades in many regions were weak, and social stocks were high.

In the week of March 25, US PCE data will be issued. The market may expect a higher possibility of an interest rate cut in June based on the inflation situation; in the absence of obvious negative domestic news, copper prices will unlikely fall in the near term. LME copper is expected to run at $8,800-9,100/mt, and SHFE copper prices are expected to run at 71,500-73,000 yuan/mt. Spot trades can hardly improve under the influence of high copper prices, and the spot discounts are expected to be 200-100 yuan/mt.