Copper futures Prices Plunged Amid Global Risks And China’s Weaker-Than-Expected Economic Data

After the Labour Day holidays in China, the US Federal Reserve raised interest rates by 25 basis points as expected. The US April CPI increased by 4.9% year-on-year, recording 10 consecutive months of declines, and lower than the expected 5%. Given the still high core inflation level, interest rates in the US will remain high for the foreseeable future and the expectation of a rate cut at the end of the year has declined. The number of US initial jobless claims two weeks ago registered 264,000, higher than expected 245,000. The cooling inflation data and job market in the US indicate that the US economy is gradually returning to normal and the possibility of an economic recession is reduced. The US dollar index returned to above last week, and copper prices fell sharply.

The European Central Bank slowed down the pace of interest rate hikes and raised interest rates by 25 basis points as scheduled. Its impact on the US dollar weakened. In China, the import and export data released last week showed that export orders remained stable. But Caixin PMI for China recorded 49.5 in April, indicating that domestic demand has lacked impetus to grow.

China’s informal financing and CPI data in April confirmed the slowdown in the domestic economic recovery due to insufficient domestic demand, especially the demand for industrial products. Fundamentally, the disruptions to copper concentrate supply has weakened. The SMM Imported Copper Concentrate Index has continued to rise, laying a good foundation for the stability of copper cathode production in the future. In addition, import losses shrank thanks to the improving SHFE/LME copper price ratio.

The inflows of imported also helped to stabilise domestic copper supply. Notably, copper scrap supply has tightened amid falling copper prices. And RCs of blister copper will continue to fall. The weekly average operating rate of copper rods plants using copper cathode as raw materials rose last week. But this was mainly driven by the lower copper prices, incentivising those plants to increase production schedules. The sustainability of orders is not promising. In terms of inventory, as of Friday May 12, the social inventory of copper cathode in China was 152,000 mt, down 16,100 mt compared with 168,100 mt on Friday May 5. The sharp inventory decline is due mainly to the plunge in copper prices which boosted demand. But it is unlikely that this significant inventory decline will continue in the future.

More popular news:

'Bond King' Jeffrey Gundlach Says Sharp Fed Rate Cuts By Year-End Will Push Up Gold Prices

Rio Tinto Warns of Risks for Paying High Premiums for Lithium Mines after Plunging Lithium Prices Triggered Acquisition Rush

Citigroup Warns European Commercial Real Estate Values Will Plummet 40%, But Sees Medium-Term Opportunity

IMF: US Debt Defaults Will Take a Heavy Toll on Global Economy, Global GDP Growth Can Plunge

Goldman Sachs Warns of Serious Risks US Dollar Will Lose Reserve Currency Status on Debt Ceiling Standoff

Goldman Sachs Sees European Gas Prices Tripling, Gives Price Forecast in H2 2023

BofA Sharply Lowers Forecast for Oil Price, Global Oil Consumption in 2023

UBS Raises China GDP Growth Forecast, Sees Earnings from China Stock Market Soaring, RMB Appreciating

Global Aluminium Inventory to Plunge Further amid Supply Headwinds, LME Aluminium Prices to React Fast

Takeaways of Warren Buffett and Berkshire Hathaway’s 2023 Annual Meeting

High Lithium Ore Prices in Australia will Drive Lithium Prices Rebound, Reasons Prevent Output to Grow

Sharp Output Cuts Led to Lithium Ore Shortages, High Import Prices Drove Lithium Salt Producers to Shut Down

US Treasury Bill Rates Soar to Record High on Debt Ceiling Jitters

Russia is Accelerating Technology to Become Top Liquefied Natural Gas Supplier by Tripling Exports By 2030

No Other Country can Replace China's Manufacturing Industry Including India

Global Manufacturing PMI in April Points to Greater Downward Pressure on Global Economy

SMM Daily Comments (May 5): LME Base Metals Rose across the Board, SHFE Nickel Plunged

SMM Daily Comments (May 9): Most LME Base Metals Closed Lower, SHFE Nickel Prices Plunge, Ferrous Metals Mostly Rose

SMM Daily Comments (May 12): SHFE Base Metals and Silver Prices Crashed, Most LME Base Metals Prices Went Down, Oil Posted 3-Day Losing Streak

A Bull Gold Market Has Just Begun 

Fitch Ratings Raises Saudi Arabia IDR, Says World Bank Reason and High Dependence on Oil Remain a Weakness for the Country's Rating

Copper Shortage Is Irreparable Even after Biggest Mergers and Acquisitions, Here’s Why

Buffett Talks about Banking Crisis and Bank Stocks He Bought, Munger Warned Commercial Real Estate: the City Will Be Seriously Hollowed Out