Copper futures moved rangebound with strong support

On the macro front, The US Federal Reserve is likely to cut interest rates only once for the rest of 2024, according to its “dot plot”. The US dollar index fluctuated around 105 points. In China, May CPI data dropped slightly MoM, with the YoY increase remaining flat from the previous month, while PPI turned from a decline to a rise MoM, with the YoY decrease narrowing. However, most of the May PPI increase was contributed by rising raw material costs, and the manufacturing industry's net profit still faces pressure. With no major changes in the overall macro contradictions, LME copper hovered sideways between $9,750-9,950/mt in the week ending June 14, and SHFE copper traded narrowly between 79,000-81,000 yuan/mt.

In terms of fundamentals, in the week ending June 14, traded copper concentrate TCs turned from negative into positive territory, but there was no progress in H2 long-term order negotiations. In the imported copper market in the Shanghai bonded zone, spot quotations and trades both rose due to an improved SHFE/LME price ratio in the middle of the week. In the domestic spot market, as the SHFE 2406 copper contract approached delivery, the contango of front-month contract against next-month contract expanded significantly, and spot premiums rose to around 100 yuan/mt. Downstream consumption showed a moderate recovery, and Shanghai finally saw destocking again after a month. In the week of June 17, the central banks of Canada, Switzerland, and the UK will successively issue interest rate decisions. Against the backdrop of diverging economic cycles in Europe and the US, market expectations for rate cuts by various central banks are increasing. With both macro and fundamental expectations being neutral, copper futures may continue to fluctuate near the support level in the short term. LME copper is expected to trade between $9,700-10,000/mt, and SHFE copper between 79,000-81,000 yuan/mt. The SHFE 2406 copper contract will be delivered on Monday June 17, and supported by the demand, the spot discount against the 2407 contract is expected to narrow from 200 yuan/mt to 250-100 yuan/mt.

The model predicts that the closing price of the copper main contract will trade between 76,730-82,795 yuan/mt from Thursday June 13 to Wednesday June 19, with an average of 79,640 yuan/mt. The extreme price range is 74,400-84,450 yuan/mt, the normal price range is 75,950-83,350 yuan/mt, and the conservative price range is 77,510-82,240 yuan/mt. The price is expected to move sideways or fluctuate weakly in the week of June 17. The support range is 75,950-77,510 yuan/mt, and the resistance range is 82,240-83,350 yuan/mt.