SHANGHAI, Aug 9 (SMM) - US non-farm payrolls for July recorded 943,000, 85,000 higher than expected, bolstering the US dollar index. The Federal Reserve Board of Governors expressed optimism about the economic outlook, growing expectations of an earlier-than-expected reduction in its debt purchases. The Bank of England also said that it would moderately tighten its monetary policy at an appropriate time to control inflation.
As such, the US dollar index climbed to around 92.5, weighing on copper prices. Concerns linger over the slowdown in economic recovery due to the delta variant. However, the impact of the COVID-19 pandemic on China, Europe and the United States is limited. The overall situation is under control.
On fundamentals, China's copper cathode output in July stood at 830,500 mt, an increase of 0.1% month on month and 10.8% year on year. On the raw materials front, TCs of imported copper concentrate continued to rise, up from $45/mt at the beginning of the month to over $58/mt at the end of the month. Meanwhile, prices of domestic sulphuric acid on a delivery to factory basis have exceeded 1,000 yuan/mt amid strong demand for fertiliser. RCs of blister copper dipped slightly amid tight supply of copper scrap, but remained profitable based on the cost of around 1,000 yuan/mt at smelters. Smelters have strong enthusiasm to produce due to high profits. This, together with a large inflow of imported copper under bill of lading, caused accumulated inventory amid the traditional off-season, weighing on copper prices.
SHFE copper prices are expected to move between 69,000-71,000/mt this week, and LME copper will trade between $9,400-9,680/mt.
Most of the trades will occur among traders this week. A large inflow of imported copper lowered spot premiums last week. Inventories of first-hand cargoes fell sharply. Premiums of around 100 yuan/mt attracted traders to restock cargoes. Downstream purchases will be subdued in the short term unless the pandemic eases. Spot premiums are expected to move between 100-220 yuan/mt this week.