Copper prices to remain in downward trend this week

Published: Jul 13, 2021 13:21

Save

The full release of domestic liquidity boosted short-term market bullish sentiment, pushing up LME copper prices by $200/mt. However, the possibility of an earlier reduction in bond purchase by the Fed has strengthened market expectations of tighter liquidity.

SHANGHAI, Jul 13 (SMM) — The People's Bank of China decided to lower the deposit reserve ratio of financial institutions by 0.5 percentage point on July 15, 2021. The full release of domestic liquidity boosted short-term market bullish sentiment, pushing up LME copper prices by $200/mt. However, the possibility of an earlier reduction in bond purchase by the Fed has strengthened market expectations of tighter liquidity. In addition, the market expects that US employment data will pick up significantly after August. A potential higher US dollar index will prevent copper prices from rising in the long term.

SHANGHAI, Jul 13 (SMM) – CPI data of European countries and the US, as well as domestic GDP data for the second quarter will be a market focus this week.

On fundamentals, large volumes of dip purchases have lowered domestic inventory significantly. But in the medium and long term, most of the smelters have sufficient copper scrap stocks even as some domestic smelters will stand Maintenance. Affected output is expected to stand at 18,000 mt. With the continuous recovery of TC and high prices of sulphuric acid, smelters should maintain high production in the third quarter. This combined with the off-season will lead to oversupply. This will accumulate domestic inventories, limiting gains in copper prices.

SHFE copper prices are expected to move between 67,300-70,200/mt this week, and LME copper will trade between $9,230-9,600/mt.

The market focus is on the price spread between the SHFE front month and next month contracts. The contango stood between 100-150 yuan/mt last week, sidelining arbitrage traders. Some market participants believe that the price spread will expand, strengthening spot quotes. Warrants decreased over 5,000 mt, reflecting tighter supply. This should bolster spot quotes. Spot premiums are expected to move between 180-250 yuan/mt.

Prices Copper

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

56 mins ago

Copper Prices Drop, Spot Premiums Rise as Shanghai Copper Month Spread Narrows

[SMM SHFE Copper Flash] As copper prices fell and the price spread between SHFE copper futures contracts for different delivery months narrowed, suppliers showed a clear willingness to hold prices firm, and the center of spot premiums moved higher intraday compared with yesterday.

56 mins ago

1 hour ago

Capstone Copper Achieves Record Quarterly Production; Overnight LME Copper and SHFE Copper Extend Declines [SMM Copper Morning Meeting Minutes]

SMM Morning Meeting Minutes: Overnight, LME copper opened at $12,843/mt, fluctuated downward in early trading to a low of $12,722/mt, then rose in a stepwise manner and climbed to $12,987/mt near the close, finally settling at $12,964.5/mt, down 0.92%. Trading volume reached 40,500 lots, and open interest reached 307,000 lots, down 4,847 lots from the previous trading day, mainly due to long position reductions. Overnight, the most-traded SHFE copper 2704 contract opened at 100,530 yuan/mt, then fluctuated downward to a low of 100,200 yuan/mt. Subsequently, the center of copper prices gradually moved higher and hit a high of 101,530 yuan/mt near the close, finally settling at 101,330 yuan/mt, down 1.05%. Trading volume reached 92,000 lots, and open interest reached 194,000 lots, down 3,792 lots from the previous trading day, mainly due to long position reductions.

1 hour ago

16 hours ago

Zambia to Reopen Key DRC Mineral Export Route After Rain Damage Disrupted Transport

Zambia’s Minister of Infrastructure said the main corridor for the DRC’s exports of copper, cobalt, and other minerals was expected to reopen after transport was disrupted by road damage.The DRC is Africa’s largest copper producer and the world’s second-largest copper producer by production. The DRC is also the world’s leading supplier of cobalt, with cobalt production accounting for more than 70% of global production, and most cobalt is exported together with other critical battery minerals.Kasumbalesa is the busiest transit point for the DRC’s metal cargo (mainly bound for China and the US). On Sunday, traffic at the crossing was suspended after heavy rains washed away parts of the road.So far, no mining company has reported that shipments of copper or cobalt have been impeded.

16 hours ago