[SMM Analysis] it is difficult to change the decline of copper prices when macro sentiment stabilizes.

SMM, July 1 / PRNewswire-Asianet /-

Recently, copper prices are mainly disturbed by macro trade events, and a little bit of related events can affect the judgment direction of market investors. After the G20 risk event temporarily came to an end this week, market sentiment stabilized slightly. This morning, driven by a positive macro mood, copper prices rose as high as 47450 yuan / ton, up nearly 0.8 percent within the day. From the point of view of the market, the top failed to break through the Brin curve on track, and then the overall rise stopped at 49400 yuan / ton, and the upward momentum was slightly insufficient.

At present, the macro mood has improved, can copper prices continue to rise?

SMM believes that from a macro point of view, short-term market pessimism has been soothed by trade events and has improved slightly, but the pattern of downward pressure on the global economy has not changed, risk aversion superimposed by the Federal Reserve interest rate cut has been gradually digested, the dollar has recently recovered at a low level, and copper prices are holding pressure above the price of copper.

The most interesting thing is the fundamentals of copper. Last week, the copper inventory increased by 11272 tons to 146019 tons compared with the previous month. According to the results of SMM's recent investigation on the demand of the copper processing industry, the emergence of the domestic inventory inflection point implies that the consumption of the copper market in the largest copper consumer has gradually entered the off-season of consumption, as well as the end of centralized maintenance of the smelter in April and May, superimposed on the launch of the newly expanded production capacity of Guangxi Nanguo and Chifeng Jinfeng in the domestic smelter, and the domestic inventory pressure gradually appears. Recently, the price spread of futures contract between 1907 and 1908 has an expanding trend of Contango structure, which also seems to confirm the increase of inventory pressure.

In addition, the raw material side of the continuous release of good news, from this year's foreign mine end accidents, to the domestic scrap copper import restrictions, seems to play a certain support to the copper price, but according to SMM research, although Zambia, Chile and other places frequently accident, copper concentrate TC and crude copper processing fee reduction trend is obvious, but the domestic smelter has not been affected by the raw material side of the phenomenon, still maintain normal production. In addition, the impact of copper scrap limited to stimulate electrolytic copper consumption is also limited, from the current first batch of restricted import scrap copper approval, slightly better than the market expectations, the use of waste major enterprises waste six types of approval has not been affected. Therefore, the tight supply expectations on the raw material side only emotionally support the price, but it is difficult to provide impetus for copper prices at the moment.

Therefore, SMM believes that the current macro, fundamentals to promote the motivation of copper prices have become weaker, the market every high short in line with the current operational logic.

(SMM Kwong Tze-si)