Copper Prices Moved Rangebound as US Non-Farm Payrolls Topped Market Expectations

LME copper prices closed at $8,247.5/mt last Friday evening, up 0.19%. Trading volume was 21,000 lots and open interest stood at 253,000 lots. SHFE 2307 copper contract finished at 66,130 yuan/mt last Friday evening, up 0.33%. Trading volume was 47,000 lots, and open interest stood at 183,000 lots.

On the macro front, the US data released last Friday showed a surge in non-farm employment in May. The market expected the Fed to continue to raise interest rates in July. The focus will turn to the CPI data in May which will determine the path of interest rate hikes in June.

On fundamentals, as of June 2, SMM copper inventories in major Chinese markets fell 7,200 mt to 111,100 mt from last Monday, down 7,300 mt from two Fridays ago. Inventories have fallen for four consecutive weeks, but were still 700 mt higher than the same period last year. Due to the inflow of imported copper in east China, and the reduction in downstream replenishment, inventory declines were insignificant. Inventories in south China declined sharply due to limited arriving shipments of imported copper and domestic copper. Downstream demand is expected to be better this week on ample cash flows at the beginning of the month.

Copper prices have fluctuated rangebound recently due to the expectations of US interest rate hikes. The market expects that the Fed will pause interest rate hike in June. Copper prices rebounded, but it is expected that the further upside room will be limited.

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