Copper prices rose despite strong US dollar

Copper prices rose further even as the US dollar index surged in the week ending April 5. On Monday April 1, LME was closed. SHFE copper prices rose again due to positive domestic macroeconomic data, and the upward trend continued in the first half of the week, with prices breaking through 74,000 yuan/mt. On Tuesday, LME copper prices returned to above $9,000/mt, breaking through $9,050/mt. In the US market, US factory orders increased by 1.4% month-on-month in February, the highest since November 2023; JOLTs job vacancies increased by 8.756 million in February, the smallest increase since October 2023; strong manufacturing and employment data made those in the market who were expecting a rate cut uneasy, and the Federal Reserve also sounded a hawkish tone again. The US dollar rose to 105, putting pressure on other risky assets. During the week, the euro was pushed below the 5-day moving average against the US dollar. The final value of the eurozone's manufacturing PMI in March was 46.1, which was higher than the market expectation of 45.7 but hit a three-month low. The yen continued to fall as the dollar rose; Bank of America said: "Unless the Fed cuts interest rates this year, the yen could fall to 160 against the dollar." This put obvious pressure on the Japanese yen, with the USD/JPY exchange rate around 151 during the week.

In the Chinese market, China's manufacturing purchasing managers' index (PMI) was 50.86% in March, returning to the expansion range for the first time in six months. The strong momentum of China 's economic recovery has made the market bullish on the future market. The Caixin manufacturing and service industry data were also quite impressive. Currently, the production and operation activities of the manufacturing industry are accelerating. In this scenario, copper prices were not suppressed by the US dollar during the week.

From a fundamental perspective, the stocking up for the Qingming Festival increased the operating rates of some copper semis plants, but the continued gains in copper prices suppressed orders. The trades in the spot market were not strong, and the drop in social inventory of copper cathode was limited. In the week of April 8, many countries will announce their interest rate decisions, and the US CPI and PPI data will be released. LME copper is expected to trade between $8,900-9,100/mt in the week of April 8 and SHFE copper prices will fluctuate between 72,500-74,500 yuan/mt. After the Qingming Festival, the spot premiums may be quoted at highs considering the capital cost, but the actual traded prices may be lower. Spot copper is expected to trade with discounts of 50 yuan/mt to premiums of 30 yuan/mt.