Copper Futures Prices Rebounded, White House and GOP Strike Debt Limit Deal

LME copper prices closed at $8,139/mt last Friday evening, a rise of 1.86%. Trading volume was 17,000 lots and open interest stood at 259,000 lots. SHFE 2307 copper contract finished at 65,090 yuan/mt last Friday evening, up 1.86%. Trading volume was 62,000 lots, and open interest stood at 204,000 lots. On the macro front, the U.S. dollar index rose after the April PCE data was released. The core PCE price index in April increased by 4.7% year-on-year, exceeding market expectations. 

The market bets that the Fed will keep high interest rates for a longer period of time. On the fundamentals, as of May 26, SMM copper inventories in major Chinese markets fell 4,300 mt to 118,400 mt from last Monday, down 5,100 mt from two Fridays ago. 

Inventories have fallen for three consecutive weeks. There was an inflow of imported copper in east China, and the high spot premiums in east China attracted inflows of goods from various places. Therefore, the inventory decline was small.

 In south China, due to the small price difference between copper cathode and copper scrap, downstream manufacturers prefer to purchase copper cathode, leading to big inventory decline. In addition, it is expected that more imported copper will flow into the domestic market this week. The market has recently focused on the U.S. debt ceiling negotiations, and the good news will give some impetus to the rebound in copper prices.

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