SHANGHAI, Jan 16 (SMM) - The market once expected the US Fed to slow down rate hikes as US non-manufacturing PMI did not reach the expected high. Last Thursday, the US December CPI growth rate fell to 6.5%, which further confirmed the market’s expectations for the Fed’s possibly slower rate hikes on February 1. According to the CME FedWatch Tool, the probability that the Fed will raise interest rates by 25 basis points at the February meeting is 79.2%. The US dollar fell sharply to around 101 last week, while copper prices rose. According to statistics, the total monthly financing of Chinese real estate companies in December 2022 exceeded 100 billion yuan, a month-on-month increase of more than 80%. And many provinces and cities in China successively introduced real estate-related support policies. The tone of Chinese policies is set optimistic, making the market more confident in the mid and long-term economic development.
On the fundamental, most small and medium-sized enterprises took the CNY holiday last week, and a small number of large enterprises will begin the holiday early this week. Companies that maintain the operation this week will generally cut the production amid poor terminal demand and high in-plant inventories of finished products. According to SMM’s latest data, as of last Friday, copper inventory across major Chinese markets totalled 135,500 mt, up 86,600 mt YoY. The bonded zone inventories will grow in the near future amid closed import window. But the smelters can export instead, hence the possibilities of the inventory accumulating after the Chinese New Year will decrease. LME copper prices rose last week and once hit a seven-month high, while SHFE copper prices grew much slower. The most-traded SHFE copper is expected to move between 66,000-69,500 yuan/mt this week, and LME copper will trade between $8,550-9,200/mt.
Spot premiums will fluctuate with some ups early this week affected by the spread between the front-month and next-month contracts. Afterwards, the premiums will drop with lessmarket participants remaining in operation approaching the Chinese New Year. SMM presumes that the spot premiums may move between 0-100 yuan/mt this week.