Copper Prices to Be Subject to Follow-up Consumption post CNY Holiday

SHANGHAI, Jan 28 (SMM) - LME copper price remained high during the Chinese New Year (CNY) holiday and closed the night session of Friday January 27 at $9,270/mt, down 1%. As a major metal consumer in the world, the Chinese market was closed for the CNY holiday, leading to stalling market transactions. LME copper, on the other hand, remained high as a whole and changed little. Therefore, the market focused more on the US economic performance during this period. The US December PCE price index and consumer confidence index were released on Friday. In addition, the US fourth-quarter GDP released on Thursday showed a slowdown in growth, but it was still higher than market expectations. These economic data supported the US dollar, and copper prices fell under pressure on Friday. On the other hand, during the holiday, LME copper inventory kept falling and reached 73,975 mt as of January 27, a drop of 6,050 mt from 80,025 mt before the CNY holiday.

Market outlook: Affected by the severe pandemic situation before the CNY holiday, domestic copper cathode inventory continued to accumulate, which was at a high level compared with previous years, which may cap copper prices. However, in the first year after the pandemic control measures are substantially relaxed, it is expected that domestic consumption will recover gradually with the resumption of work and production and the introduction of a series of support policies at the end of 2022. At present, the world has high expectations for the improvement of domestic consumption in 2023, which will keep copper prices at a high level, while the consumption might be hurt by such high prices. In other words, the actual terminal consumption is of ultimate concern.