Copper prices went down as US housing starts hit new low

LME copper prices opened at $8268.5/mt and closed at $8309.5/mt in overnight trading, a decline of 0.51%, with the low-end of $8268.5/mt and the high-end of $8333.5/mt. Trading volume was 18,000 lots, and open interest stood at 260,000 lots. The most active SHFE 2310 copper contract prices opened at 68660 yuan/mt and closed at 68740 yuan/mt last evening, a drop of 0.35%, with the high-end of 68900 yuan/mt and the low-end of 68600 yuan/mt. Trading volume was 24,000 lots, and open interest stood at 139,000 lots. On the macro front, the Federal Reserve is widely expected to keep interest rates steady on Wednesday. Still, impact from rising oil prices put the Fed in a difficult position because they drive up inflation while dampening economic growth. In addition, U.S. housing starts fell to their lowest level since June 2020, highlighting the toll of declining housing affordability. In terms of fundamentals, spot quotes fell in East China yesterday. Even though the copper prices shifted downwards and downstream purchasing intentions recovered, the oversupply put pressure on premiums; inventories in South China also increased for five consecutive days, downstream demand did not picked up significantly despite the drop in copper prices. With high inventories and market expectations that the Federal Reserve will maintain high interest rates, copper prices are unlikely to rebound in the near future.