The recent macro economic data strengthened market's expectations for economic growth of various countries in the medium and long-term, and risky assets such as copper are still bullish. From a fundamental point of view, consumption has gradually recovered following Chinese New Year holiday. Copper stocks across mainstream Chinese markets are set to fall this week amid a closed import window. However, the relatively ample supply of copper scrap and high absolute price of copper cathode are likely to hinder the speed of destocking this week, thus weighing on the copper price. The most active SHFE copper contract is expected to move between 67,500-69,500/mt this week, and LME copper will trade between $8,800-9,050/mt.
In China’s spot market, spot quotes should rise before falling in view of the delivery of the SHFE February copper contract on Wednesday. As the contango of SHFE February contract over the March contract expanded to around 130 yuan/mt, the sellers are expected to raise their quotes against the latter. Spot premiums are expected to stand at 30-100 yuan/mt before the delivery. After the delivery, spot copper is expected to be quoted flat over SHFE March contract given the pressure from large volumes of copper inventory under warrants to be offered for sale.
