SMM Review and Forecast of Copper Prices

The US dollar index fell the most since January two weeks ago as the Fed paused interest rate hike. Real estate data in the US issued last week exceeded expectations, growing market expectations over US economic growth. Interest rates were thus expected to remain high and the US dollar index rebounded last week. Should Fed officials maintain hawkish tone, the US dollar index will continue to rebound, which will cap the gains in copper prices. In the eurozone, high inflation is still an important issue facing the British economy. The pound will continue to put pressure on the dollar in the future.

In China, economic data in May showed that the domestic economy showed a downward trend in the second quarter. The People’s Bank of China adjusted the loan prime rate (LPR) to provide liquidity for the market. In addition, the purchase tax for new energy vehicles will be exempted until end-2025 in order to promote automobile consumption. A series of policy support kept copper prices rangebound at highs. As of Wednesday June 21, the social inventories of copper cathode stood at 83,200 mt, down 10,400 mt from Friday June 16. The current high spot premiums and low inventories still give some support for copper prices.

Positive macroeconomic sentiment will last for a while. Downstream buyers were cautious about high copper prices. Copper prices will fall if the Fed's hawkish speech pushes the US dollar index to rally. The most active SHFE copper contract prices are expected to move between 67,500-70,000/mt this week, and LME copper will trade between $8,450-8,650/mt. In the spot market, the inventory continued to decline as most of the imported cargoes were directly delivered to downstream buyers. Spot premiums will remain firm and stand between 450-620 yuan/mt.