SHANGHAI, Jun 1 (SMM)— SHFE and LME copper prices were mixed last week. LME copper prices stemmed declines amid announcement of new infrastructure plans in the US and the dovish remarks of the Fed on inflation. However, SHFE copper prices fluctuated at lows last week against the supervision on commodity prices by the State Council.
The LME will be closed for one day for bank holiday. This, coupled with cash flow issues at the month-end will prompt bulls to sell off. Domestic copper prices are expected to rally with LME copper prices. Domestic social inventory has declined significantly last week, driven mainly by maintenance at domestic smelters and decreased arriving shipments amid the long closed import window. Downstream buyers purchased as required amid consistent price declines, preventing copper consumption from improving noticeably. SHFE copper prices are unlikely to rise sharply in the short term amid pressure from Chinese leadership and expectations over stable official manufacturing PMI in China.
US non-farm payroll and PMI from European countries and the US are due this week, and the data is set to be optimistic. The Federal Reserve has continued to raise expectations over the official manufacturing PMI. That, combined with recent disruptions to the supply side will buoy LME copper prices. Expectations over glacier protection laws and tax increases in Chile have panicked the market. Remote workers unions of BHP Escondida and Spence copper mines in Chile started a strike earlier last Thursday, which has exacerbated market uncertainty over global copper supply. The market is still evaluating the impact from the strike on output. Potential wider import losses are expected to continue to lower inventories.