Copper prices consolidated rangebound amid firm US dollar

In the second trading week after the Chinese New Year holiday, copper futures gave up the gains logged in the first week after the holiday and remained rangebound. Although there were no obvious negative factors in macro and fundamentals during the week, the continued upward momentum was lacked, and copper is currently suppressed below the 5-day moving average. Although the US new home sales data for January was higher than the previous value, it was lower than expected. Home buyers still need to worry about loan pressure against high interest rates; the dollar fell. But during the week, Federal Reserve Governor Bowman once again said, "It is "too early” to start cutting interest rates.” The US dollar continued to strengthen at a high of 103, and copper futures prices fell slightly. The market's expectations for the Federal Reserve's first interest rate cut in May have been lowered again. The US January PCE data has attracted much attention Thursday night. If the data drops as expected, the market expectations over an interest rate cut in May may increase. However, there is no sign of a change in the Fed's hawkish attitude. It is expected that the dollar will hardly fall significantly. The euro against the US dollar also stabilised. There is news that the European Central Bank will continue to set a "lower limit" for market interest rates in the next few years, but banks will play a greater role in deciding how much liquidity they need; currently that has little impact on euro fluctuations.

In the Asian market, Japan's CPI continued to rise, negative interest rates may be adjusted, and the dollar against the yen fell. In the Chinese market, the fourth meeting of the Central Financial and Economic Commission mentioned measures su ch as replacing old consumer cargoes with new ones, including home appliances, and promoting high-quality development. Copper semis related to home appliances may be boosted. The A-share market went up further in the week ending March 1, exceeding 3,000 several times. The market remains optimistic about the February PMI data.

TCs continued to fall. SMM understands that some smelters will start concentrated maintenance at the end of March, but the current copper cathode spot market is still oversupplied. Although copper prices have given up part of their gains, they are still around 69,000 yuan/mt. The performance of copper semis sector did not improve significantly in the second week after the CNY holiday. The social inventory of copper cathode continued to rise. Inventories in the bonded area continued to grow. The discount of spot cargoes remained and showed no signs of improving for the time being. At present, consumption has given limited boost to copper prices. The second session of the 14th National Committee of the Chinese People's Political Consultative Conference will be held in Beijing in the week of March 4. The market is waiting for positive guidance. In addition, PMI data from many countries and US employment data will be a market focus. LME copper is expected to trade between $8,350-8,600/mt in the week of March 4 and SHFE copper prices will fluctuate between 68,000-69,500 yuan/mt. It is expected that the spot copper in the week of March 4 will be quoted with discounts of 50 yuan/mt to premiums of 50 yuan/mt.