Risk appetite rebounds, copper continues to be boosted in the short term [institutional commentary]

Overnight, LME copper prices fluctuated and rose. Macro side, the US Labor Department reported that April CPI increased 2.3% YoY, slightly below the expected and previous 2.4%; core CPI increased 2.8% YoY, in line with the expected and previous 2.8%. Although the Trump administration's tariff policies are widely expected to push up inflation, companies may still be digesting large inventories and have not yet started to raise prices comprehensively. The market expects this to gradually manifest in the next two to three months. On the same day, Trump again pressured Fed Chairman Powell to cut interest rates. Domestically, after the US and China reached a tariff agreement, overseas investment banks have raised their expectations for China's economic growth. Inventory side, LME copper inventories decreased by 1,100 mt to 189,650 mt; COMEX inventories increased by 1,500 mt to 149,788 mt. Domestic demand side, current orders are relatively stable, but with the expected transition from peak season to off-season, end-use demand orders may gradually slow down.

The US-China trade negotiations have made progress beyond expectations, which is expected to continue to drive a rebound in risk appetite, providing short-term support for copper. Under the current resonance of macro and fundamentals, there is no immediate reason for significant bearishness. Copper prices are expected to rise to the range of 78,000-80,000 yuan/mt, but investors should pay attention to the downstream acceptance when copper prices re-enter the high price range, especially during the transition from peak season to off-season and the temporary slowdown in the export window rush. The fundamentals and inventory performance of copper will then determine the risk of another jump initially and then pull back in copper prices.

(Source: Everbright Futures)