Copper Futures First Decline Then Rise during the Week

In the US, May retail sales recorded 0.1% MoM. Although consumer spending showed some recovery, it was still below market expectations. Both May housing starts and construction permits fell short of market expectations. That, coupled with concerns over commercial real estate, lowered the dollar slightly. However, US stocks remained strong, with both the Nasdaq and Dow Jones indices hitting historical highs. The Swiss National Bank cut its benchmark rate by 25 basis points, pushing the dollar higher. In the Chinese market, M1 and M2 showed a tightening trend in May, and social financing data was mediocre. Industrial added value declined from the previous reading. The PBOC delivered a speech on improving the market interest rate regulation mechanism, aiming to provide further financial support for sustained economic recovery. At the beginning of the week, LME copper dropped to $9,550/mt. Due to buying support and macro policy stimulus, it rebounded slightly. SHFE copper, boosted by domestic policies, performed stronger, fluctuating at 78,000-80,000 yuan/mt.

According to the latest report from the World Bureau of Metal Statistics (WBMS), in April 2024, global copper cathode production was 2.3716 million mt, while consumption was 2.4925 million mt, resulting in a supply shortage of 120,900 mt. The supply tightness of ore persists. The imported copper market was sluggish. In the domestic spot market, the expected boost in consumption has yet to materialize. In the week of June 24, a large number of US stock options are set to expire, injecting some uncertainty into the market. The expected decline in the dollar will support copper prices. LME copper is expected to trade between $9,800-10,100/mt, while SHFE copper is expected to trade between 78,000-81,000 yuan/mt. In the spot market, the inflow of imported copper together with the release of warrants will increase the pressure on sellers. With downstream consumption demand showing no signs of growth, spot discounts against the SHFE 2407 contract are expected to be between 100-250 yuan/mt.

The model predicts that the closing price range for the most traded SHFE copper contract from Friday June 21 to Thursday June 27 will be [77,905, 81,315] yuan/mt, with an average of 79,460 yuan/mt. The extreme price range is [76,220, 82,550] yuan/mt, the normal price range is [77,340, 81,730] yuan/mt, and the conservative price range is [78,470, 80,900] yuan/mt. The price is expected to be sideways. The support range is [77,340, 78,470] yuan/mt, and the resistance range is [80,900, 81,730] yuan/mt.