SMM4, March 1: the Shanghai copper 1805 contract closed at 50110 yuan / ton on Friday, and the Shanghai copper 1805 contract closed at 50180 yuan / ton on Friday, March 30. Copper is up 0.14 per cent this week from Friday's close. The good news this week came as trade talks between China and the United States began to allay market concerns, with base metals generally rising on Friday. In addition, copper prices were hit by a surge in LME copper inventories, only marginally higher than last week. So what will copper prices do next week?
SMM exclusive interview: outlook for Copper Price trend next week
Soochow futures Zhang Huawei: copper prices are expected to be strong next week. In April, downstream consumption is expected to recover further. Some of the pent-up demand caused by funding constraints at the end of the quarter will also be released, and oversupply in the spot market will improve. In the second quarter, domestic wire and cable, air conditioning and other industries will still drive the growth of copper demand. On the macro side, the economies of China, the United States and Europe continue to improve. It will be announced on Saturday that China's official manufacturing PMI, market is expected to recover from February. Although the momentum of manufacturing expansion in China and Europe has weakened, the overall momentum is still solid and good. China's GDP is expected to grow by 6.8 per cent in the first quarter. The US housing market is strong, the labour market is tightening and inflationary pressures are rising. Industrial prices plummeted in March as a result of the warming of the global trade war and lower-than-expected downstream demand after the Chinese New year. As trade talks between China and the United States began, market concerns cooled and industrial prices and global stock markets stabilised at the end of the month. At the same time, copper prices after a substantial adjustment, 50,000 below the support reflected. With only three trading days ahead of the Qingming holiday next week, the market may still be slightly cautious, but bullish confidence is expected to strengthen and copper prices are expected to fluctuate strongly next week.
An grain futures Zhong Yuan: copper prices fell in this round of three waves structure, in which the third wave continued the five-wave small structure, is currently in the fourth wave rebound, so there is a five-wave decline process. The real rebound, to wait until these five small waves after the end, can be opened! From the point of view of the big cycle, the overall market structure of copper prices has changed, and the weak shock is the main theme of 2018.
McCormick futures Deng Hong: trade war panic temporarily eased, news window period, improved macro mood, coupled with tax cuts and other positive expectations, is expected to rebound as a whole. Downstream consumption of copper is expected to accelerate, manufacturing tax cuts or attract processing enterprises to stock goods, spot may be converted to rising water, price shocks recovered, 51,500 ≤ 50000.
SMM exclusive prediction
SMM expects copper prices to bottom out and climb slowly next week. London Copper and Shanghai Copper both recorded their biggest quarterly declines since 2014, down 7.05 per cent and 10.25 per cent, respectively, since the first quarter of this year. The Sino-US trade war has been suspended, and the LME will be closed this Friday and next Monday. on the disk, after a hammer with a long shadow line hit a low of 6532 US dollars per ton last week, the MACD green column has been shortened and the 5-day moving average has been hooked up. This indicates that the market is more confident about the bottom position. taking into account the macro risk factors and the pressure of each moving average group above, it is expected that Lun Copper will slowly repair the decline next week, running in the range of 6650 ≤ 6850 US dollars / ton as a whole. In Shanghai copper, the impact of value-added tax reform on the spot market has yet to be further detailed by the relevant institutions. As the end of the month and the end of the quarter, speculative funds and traders hedge market withdrawal of a large number of contracts that month, 1804, 1805 contract spreads continue to narrow, and once upside down. Due to the loss of scrap copper price advantage, it will also stimulate part of refined copper consumption, copper prices to form a certain support. On the disk, Shanghai copper has a stable recovery trend, is expected to run next week as a whole at 49500 ≤ 51,000 yuan / ton. On the spot side, the financial pressure will ease after the cross-moon next week. with the recovery of downstream consumption and the replacement effect of refined copper on scrap copper, because there are only three trading days next week, the downstream needs to reserve more holiday raw material stocks. Holiday stock is expected to make next week's discount will continue to narrow, spot quotations will be 130 ≤ 50 yuan / ton.
When the dollar rebounded sharply in the week, it closed at a 90-round mark. Strong US data, the temporary easing of the Sino-US trade war, and the cooling of the situation in North Korea have all supported the US dollar. U.S. gross domestic product (GDP) for the fourth quarter was beautiful on Wednesday, as well as data on the PCE price index for February, personal spending for February and initial jobless claims for the week ending March 24. Good data continue to support the dollar. The final value of the US real GDP annualized quarter was revised up 2.9 per cent in the fourth quarter, with an expected rise of 2.7 per cent, compared with a 2.5 per cent rise in the previous quarter, according to specific data.
At the same time, the temporary easing of fears of a trade war between China and the United States is also good for the dollar. However, the expected US infrastructure plans have been delayed again to the detriment of the US dollar. U.S. President Donald Trump said Thursday that his $1.5 trillion infrastructure plan may not be implemented until after November's midterm congressional elections. Under Trump's infrastructure plan, the federal government has contributed only $200 billion, with the remaining $1.3 trillion largely dependent on local government and private investment. According to senior White House officials, there will be no infrastructure plans this year, and it is believed that there will be no infrastructure plans until next year. As for the outlook for the future dollar, ANZ warned that April was the worst month for the dollar index, particularly against sterling, the Australian dollar and the Canadian dollar. Data over the past 18 years show that 16 sterling have risen against the dollar, 13 Australian dollars have risen against the dollar and 13 dollars have fallen against the Canadian dollar in the past 18 April. Standard Chartered believes the Fed may normalize policy further, but the ECB has not even begun, and the ECB is expected to withdraw from the QE, by the end of the year and start raising interest rates in the first and second quarters of next year. The current forward trajectory between December 2018 and December 2020 shows that Europe is steeper than the US, and perhaps the market has expected the Fed's interest rate cycle to end. On the other hand, analysts at Commerzbank believe that the market has been in great demand for US dollars, many of which are financed from other currencies through swap arrangements for US dollars. at present, US dollar liquidity in the market is tight. It could be related to continued interest rate hikes in the US, and dollar financing could become more expensive in the future, which could lead companies to repay the dollar in advance and could push dollar interest rates or exchange rates higher. The market is now paying more attention to the mid-term elections at the end of the year in the United States, which could completely change the political landscape in the United States. If Republicans succeed in pushing infrastructure plans to land and win the midterm elections, the dollar will be strongly supported and repeat the 2016 US election. If defeated, there is a risk that the dollar will accelerate its decline.
The euro weakened this week, driven mainly by a stronger dollar, followed by a greater focus on the ECB's future policy prospects. The market continues to speculate on expectations that the ECB will accelerate interest rate hikes, which is expected to provide sustained support for the euro. Recently, ECB officials have hinted that although they have not yet made a decision, they have no objection to investors' expectation that the bond-buying programme will be phased out by the end of the year. The governing Council is currently considering how to change the wording of its policies in order to avoid market turmoil that has caused economic damage.
Mr Nott, a member of the ECB's governing council, made it clear this week that the world no longer needed "special" monetary stimulus and that the ECB should make its due contribution by ending its bond-buying programme after September. Nott believes that the top priority is to normalize monetary policy and strengthen the economic and monetary union, which is now a broad consensus, of course, in financial markets. Mr Nott argues that it is unreasonable to compare with the US, which is three or four years earlier than the ECB in terms of the monetary policy cycle, and that US reinvestment has lasted about three or four years. All in all, it could take a decade to eliminate these unorthodox, unconventional tools. In addition to Mr Nott, Bundesbank president Weidmann had previously commented that the possibility of raising interest rates in mid-2019 had increased, which also supported the euro. However, ECB President Draghi is likely to continue to support a wait-and-see attitude, as he has repeatedly stressed that price pressures in the eurozone as a whole remain low-key and there are no convincing signs of a sustained upward trend. The ECB is likely to reveal a more detailed exit strategy for (QE), a quantitative easing policy that expires in September.
Crude oil market
The crude oil market has maintained a volatile downward trend this week, but the overall volatility of oil prices has been relatively limited. Oil prices fell 1.8 per cent this week and rose more than 5 per cent in March. There are both bullish and bearish factors in the market, and oil prices are likely to continue to be tidied up.
Fears of the US tearing up the Iran nuclear deal have underpinned oil prices. many analysts point out that geopolitical risks remain this week and that there is no news conducive to easing the situation. The Iran nuclear deal has looked fragile since Trump was elected president of the United States in November 2016, and Trump has so far made it clear that the United States will withdraw from the nuclear deal alone. On July 14, 2015, Iran signed an Iran nuclear agreement with China, the United States, Britain, Russia, France and Germany. However, Trump has repeatedly criticized the deal. In January, Trump asked Congress in France, Germany, Britain and the United States to take tougher measures against Iran by May 12 to "amend" the agreement. Analysts point out that Iran is thanks to the nuclear deal to get its economy back on track, and that the country is likely to express "anger" at the current situation and may "vent its anger" in the Middle East. Iran is likely to adopt a more aggressive policy towards Syria, Lebanon, Iraq, Yemen and even Saudi Arabia, and such a policy against Saudi Arabia would be the most dangerous.
Saudi Arabia and Russia are considering a long-term agreement to cut production to expand cooperation with the OPEC. The potential deal was announced by Saudi Crown Prince Salman during a week-long trip to the United States. Saudi Arabia and Russia are considering a long-term agreement to regulate the oil market. The two countries will sign a 10-year or even 20-year agreement to regulate the oil market. While the agreement shows closer cooperation between Russia and Saudi Arabia on energy, it does not necessarily mean that Saudi Arabia is turning to Russia or abandoning the United States. Saudi Arabia very much hopes that Russia will cooperate with OPEC for a long time. It is Saudi Arabia's goal to allow non-OPEC members to set production limits and reduce the global oil glut. It is in Saudi Arabia's interest to maintain the production reduction agreement with Russia, but Russia may offer Saudi Arabia additional incentives. Saudi Arabia, for example, has an important role to play in consolidating the outcome of Libya's power struggle for the benefit of Russia. Russia and Saudi Arabia disagree on their preferences for the oil market. In the negotiation of a 10-or 20-year long-term agreement, this issue will complicate the negotiations. Russia's alliance with Iran remains a problem for Saudi Arabia, which will not cover it up any time soon.