Copper prices jump initially and then pull back during night session [Institution's comment]

Overnight, LME copper prices jumped initially and then pulled back after a slight increase. On the macro side, Trump continued to pressure Fed Chairman Powell to cut interest rates, and the market awaited guidance from Powell's speech. Last night, the US dollar achieved a V-shaped trend, constraining the upward movement of copper prices. Domestically, China's social financing increment in April was 1.16 trillion yuan, with new yuan-denominated loans reaching 280 billion yuan. The M2-M1 spread widened, and yuan-denominated deposits increased by 12.55 trillion yuan in the first four months. In terms of inventory, LME copper inventories fell by 4,075 mt to 185,575 mt, while COMEX inventories increased by 1,749 mt to 151,537 mt. Regarding domestic demand, current orders are relatively stable, but under the expectation of transitioning from peak to off-season, end-use demand orders may gradually slow down.

The Sino-US trade negotiations have made unexpected progress, and it is expected to continue to drive a rebound in risk appetite, which is likely to provide a short-term boost to copper prices. Given the current resonance between macro and fundamental factors, there is no immediate reason to be significantly bearish. Copper prices are expected to rise to the range of 78,000-80,000 yuan/mt. However, investors should pay attention to the downstream acceptance when copper prices re-enter a high price range, especially during the transition from peak to off-season and the temporary slowdown in the rush export window. They should monitor the performance of copper fundamentals and inventories at that time to assess the potential risk of copper prices jumping initially and then pulling back again.

(Source: Everbright Futures)