US Inflation Data Weighed on Copper Prices

LME copper closed at $8,694.5/mt last Friday evening, a decline of 2.08%.Trading volume was 29,000 lots and open interest stood at 252,000 lots. SHFE 2304 copper contract finished at 68,550 yuan/mt last Friday evening, down 1.44%. Trading volume was 64,000 lots, and open interest stood at 159,000 lots. On the macro front, the annualised US PCE in January exceeded expectations and the previous value, showing that US inflation is still high, which further strengthened the market’s strong expectations for the Fed to remain hawkish. The US index rose, weighing down copper prices.

On fundamentals, SMM data showed that copper inventories across mainstream areas in China decreased 4,500 mt on Friday February 24 from Monday February 20, flat from two Fridays ago. A small amount of shipments arrivals of imported copper in east China combined with a slight increase in downstream replenishment lowered inventory slightly. Inventories in Guangdong continued to accumulate due to poor consumption.

In terms of consumption, due to the rise in copper prices this week, the downstream wait-and-see sentiment has increased, and it is expected that it will take time for demand to improve significantly. Copper prices fell due to the impact of US inflation data.