Copper Prices Went Down Overnight on Rebounding US Dollar Index

LME copper prices closed at $8,419.5/mt last evening, down 1.86%. Trading volume was 19,000 lots and open interest stood at 262,000 lots. The SHFE market was closed due to the Dragon Boat Festival holidays. On the macro front, Federal Reserve Chairman Powell said at a hearing of the Senate Banking Committee last Thursday that it would be appropriate to raise interest rates twice again this year, and there is still a long way to go to solve the inflation problem. The hawkish speech made the dollar rise.

In terms of fundamentals, copper prices soared to around 69,000 yuan/mt on the last trading day before the Dragon Boat Festival, which suppressed the purchasing of downstream customers. And most downstream companies had restocked cargoes on the prior day, weighing on spot quotes. The overall transaction was subdued. There would be inflows of imported copper after the holiday but most of the cargoes will go directly to downstream buyers. During the off-season, if copper prices continue to run at a high level, demand will be further depressed. Hawkish tone of central banks reduced risk appetite for risky assets, and the rise in the US index put pressure on copper prices.