Copper Prices Lack Impetus to Rise Further

SHANGHAI, Apr 24 (SMM) – China’s GDP growth rate in the first quarter reached 4.5%, far exceeding the 4% forecast. Many international investment banks have raised China’s annual GDP growth forecast to over 6%. Export performance in the first quarter also exceeded expectations, indicating that China’s economy is recovering. From the perspective of investment and consumption, China’s retail sales of consumer goods in the first quarter increased by 5.8%, and the consumption in March increased by 10.6%. Among them, catering income rose the most, by as high as 26.3%; real estate sales continued to recover, and fixed asset investment remained resilient. Yet, industrial production continued to be weak.

Fundamentally, smelters’ maintenance has limited impact on the supply of copper cathode. 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. The rate of decline has slowed down amid sluggish trades. The demand side has generally shown signs of weakening.

In conclusion, a barrage of economic data has confirmed that the US economy is gradually cooling down. But in the medium and long-term run, the US core inflation rate will remain at a relatively high level, indicating that monetary policy has worked but with a time lag. The market still has concerns about the US falling into an economic recession. There may be a risk of both dollar and copper prices falling in the near future. In the short term, a fall in the US dollar will still help copper prices recover, but on the fundamentals, it is difficult to find a driving force to support the continuous rise of copper prices. The most active SHFE copper contract prices are expected to move between 68,000-70,000/mt this week, and LME copper will trade between $8,700-9,000/mt.

In the spot market, downstream buyers are expected to restock as the Labour Day holidays near, pushing up spot quotes. Traders will be liquidating inventories ahead of the holidays. Spot copper will trade with discounts of 20 yuan/mt to premiums of 80 yuan/mt this week.