Lingering Market Concerns Weigh Down Copper Prices

LME copper closed at $8,781/mt overnight, down 1.16%. Trading volume was 21,000 lots and open interest stood at 250,000 lots. The most active SHFE 2306 copper contract finished at 69,810 yuan/mt overnight, down 0.78%. Trading volume was 37,000 lots and open interest stood at 156,000 lots.

On the macro front, data showed that US business activities are still resilient, enhancing expectations that the Federal Reserve will raise interest rates by another 25 basis points at its policy meeting next month. The US index fell after surging.

SMM data shows that as of April 21, SMM copper inventory across major Chinese markets stood at 183,500 mt, down 8,100 mt from April 17 and down 6,600 mt from a week earlier. Shanghai accounted for most of the inventory declines. Smelters shipments to warehouses decreased after the delivery of the April contract was completed. Due to the decline in copper prices, the enthusiasm for downstream replenishment has increased. In terms of consumption, the drop in copper prices may increase the enthusiasm for downstream stockpiling, but the increase is expected to be limited.

The market has strong expectations for the Fed to raise interest rates, and the domestic economic growth momentum is relatively limited. In this scenario, there is still a lot of pressure on copper prices.