Copper Prices Strengthened on Consumption Recovery Expectations

LME copper closed with a drop of 0.08% at $8,993.5/mt last Friday evening. Trading volume stood at 16,000 lots. Open interest stood at 254,000 lots. The most active SHFE 2305 copper contract finished at 69,520 yuan/mt overnight, up 0.12%. Trading volume was 171,000 lots and open interest stood at 30,000 lots.

On the macro front, the growth of U.S. consumer spending has slowed down, and inflation has shown signs of cooling, which has boosted market expectations for a slowdown in Fed rate hikes. On the fundamentals, as of Friday March 31, SMM copper inventories in major Chinese markets increased 9,600 mt from last Monday to 201,900 mt, up 1,900 mt from two Fridays ago. This is up 5,300 mt from pre-CNY level and snapped the previous inventory growth of four consecutive weeks. Cash crunch at the month-end combined with continuous rise of copper prices weakened downstream buying interest, driving up inventories.