Copper Prices Strengthened Amid Falling US Dollar Index

LME copper prices closed at $8,585/mt last Friday evening, a rise of 0.25%.Trading volume was 20,000 lots and open interest stood at 255,000 lots. The most active SHFE 2307 copper contract finished at 68,500 yuan/mt last Friday evening, up 0.12%. Trading volume was 25,000 lots and open interest stood at 185,000 lots.

On the macro front, the European Central Bank raised interest rates by 25 basis points as expected, and the market expects the bank to raise interest rates by another 50 basis points. The rise in the euro caused the US index to dive.

In addition, U.S. retail sales data showed that U.S. consumer demand remained strong, and the market expects the Fed to continue to tighten its monetary policy. SMM data shows that as of June 16, SMM copper inventory across major Chinese markets went down 4,800 mt from Monday June 12 and down 15,800 mt from two Fridays ago. The inventory was down 16,300 mt from the same period last year. The continuous reduction of warrants and limited arrivals of domestic and imported copper drove inventories in east China to fall sharply. Spot cargoes were transferred to warrants in south China, growing inventories slightly. High copper prices combined with high spot premiums is expected to weaken downstream demand. Copper prices may remain strong and will mainly affected by macro sentiment.