Copper prices to trend lower

SHANGHAI, Jun 21 (SMM) — The Federal Reserve kept its benchmark interest rate and bond purchase plan unchanged last week. Two interest rate hikes are expected to occur before the end of 2023. The policy tightening speed is expected to be faster than previously expected, and discussion of bond purchaThe Fed raised its inflation forecast from 2021 to 2023. The US Dollar index surged to around 92 after rising for three consecutive days, the highest in three months. This lowered major assets prices, with SHFE copper prices falling 6.28% last week. SHFE copper prices are likely to remain in a downward track as market concerns grow.

The market will focus on the annualised total existing homes sales in the United States in May and the flash PMI for June in Europe and America.

On fundamentals, inventories have fallen for four consecutive weeks. SHFE copper inventories declined 8,440 mt last week. Active dip buying pushed up spot prices. Domestic smelters continued with maintenance. Import opportunities are unlikely to increase remarkably in the short term even as the SHFE/LME copper price ratio improved slightly. The offering of reserves by the State Reserve Bureau depressed market sentiment. LME copper inventories continued to accumulate, surging 24,925 mt on Friday, an increase of 17%. This further suppressed the bullish sentiment.

SHFE copper prices are expected to move between 65,700-68,500 yuan/mt this week, and LME copper will trade between $9,000-9,300/mt.

Spot quotes soared amid limited supplies and continued inventory declines, but fell on Friday amid large volumes of high quality copper offered for sale under warrants. Spot premiums are expected to stabilise this week should SHFE copper prices continue to fall, moving between 80-140 yuan/mt.