How Will Fed Meeting Affect Copper Prices? SMM Interview

Published: Jun 13, 2017 17:29
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

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.

JP Morgan: Copper Prices to Weaken to $5,000 by Year-End as Ore Supplies Grow

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.

Nepal’s First Ultra-Large Copper Mine Discovered, Ore Grade Extremely High

For news cooperation, please contact us by email: sallyzhang@smm.cn or service.en@smm.cn. 

 

 

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or to learn more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
SMM: Domestic Wire and Cable Production to Surge 13.83% in March Amid Post-Festival Recovery
35 mins ago
SMM: Domestic Wire and Cable Production to Surge 13.83% in March Amid Post-Festival Recovery
Read More
SMM: Domestic Wire and Cable Production to Surge 13.83% in March Amid Post-Festival Recovery
SMM: Domestic Wire and Cable Production to Surge 13.83% in March Amid Post-Festival Recovery
[SMM Copper Flash] SMM expects that in March, the operating rate of domestic wire and cable enterprises is expected to increase 13.83 percentage points MoM to 69.44%. This is mainly because after the Lantern Festival, end-use industries have gradually resumed production, and orders are expected to be further released, supporting enterprises’ production schedules. In addition, after excluding holiday impacts, wire and cable enterprises are expected to gradually return to a normal production pace in March.
35 mins ago
Domestic Wire and Cable Firms See Raw Material Inventory Days Rise in February Amid Post-Holiday Resumption
35 mins ago
Domestic Wire and Cable Firms See Raw Material Inventory Days Rise in February Amid Post-Holiday Resumption
Read More
Domestic Wire and Cable Firms See Raw Material Inventory Days Rise in February Amid Post-Holiday Resumption
Domestic Wire and Cable Firms See Raw Material Inventory Days Rise in February Amid Post-Holiday Resumption
[SMM Copper Flash] Regarding the inventory performance of domestic wire and cable enterprises in February, days of raw material inventories increased 1.11 days MoM, mainly because as enterprises advanced their work resumption and production resumptions, they gradually began purchasing raw materials for subsequent production. Days of raw material inventories increased 0.46 days MoM, mainly because end-users were on holiday during the Chinese New Year, and pick up goods was relatively slow.
35 mins ago
Copper Wire and Cable Production Drops 14.29% in February Amid Chinese New Year Holiday
36 mins ago
Copper Wire and Cable Production Drops 14.29% in February Amid Chinese New Year Holiday
Read More
Copper Wire and Cable Production Drops 14.29% in February Amid Chinese New Year Holiday
Copper Wire and Cable Production Drops 14.29% in February Amid Chinese New Year Holiday
[SMM Copper Flash] In February, the operating rate of copper wire and cable enterprises came in at 55.81%, down 14.29 percentage points MoM, mainly due to the Chinese New Year holiday. During the holiday, wire and cable enterprises took about 11 days off on average. By sector, orders from the power sector were strong with production schedules concentrated, while engineering-related orders were relatively weak, showing clear divergence in end-use sector orders.
36 mins ago