Copper prices rose on domestic macroeconomic support [SMM copper morning comment]

Đã xuất bản: May 20, 2024 10:05 (GMT+8)
LME copper prices opened at $10482.5/mt last Friday evening before reaching a low of $10470/mt and a high of $10720/mt, and closed at $10715/mt, a rise of 3.31%. Trading volumes were 33,000 lots and open interest stood at 341,000 lots.

LME copper prices opened at $10482.5/mt last Friday evening before reaching a low of $10470/mt and a high of $10720/mt, and closed at $10715/mt, a rise of 3.31%. Trading volumes were 33,000 lots and open interest stood at 341,000 lots. The most active SHFE 2407 copper contract prices opened at 84530 yuan/mt and finished at 85270 yuan/mt overnight, up 2.38%, with the low-end of 84420 yuan/mt and the high-end of 85430 yuan/mt. Trading volume was 93,000 lots and open interest stood at 229,000 lots. On the macro level, in order to lower the threshold for residents to buy houses, the People's Bank of China (PBOC) issued three notices in a row, canceling the national floor policy on interest rates for commercial personal housing loans for the first and second homes, lowering the interest rate on personal housing provident fund loans by 0.25 percentage points, and adjusting the minimum down payment ratio for commercial personal housing loans for the first home to no less than 15%, and for the second home to no less than 25%. In terms of fundamentals, as copper prices continued to rise, the purchasing demand of processing companies was suppressed and market activity remained low. After the subsequent warehouse receipts are released, the spot supply will be more abundant, and it is expected to continue to impact the premiums and discounts. Due to the influence of macro sentiment, copper prices will move at highs in the near future.

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Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
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Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
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Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
Looking ahead to tomorrow, available supply in the Shanghai region is expected to remain tight, and with some downstream processing enterprises still having pre-holiday stockpiling demand, spot premiums continue to receive strong support. Although a small amount of imported copper locked in at favorable SHFE/LME price ratios after the import window opened earlier is gradually arriving, the overall volume is limited, and its supplementary effect on market supply is expected to be relatively modest in the short term, making it difficult to significantly ease the current supply tightness. Therefore, spot premiums are expected to have further room to rise tomorrow. However, copper prices are already at elevated levels, the backwardation between prompt and forward months has widened simultaneously, and spot premiums have climbed rapidly, leading to a notable increase in procurement costs for downstream and end-user enterprises, which may gradually reduce their acceptance of high premiums. If premiums continue to rise rapidly, some downstream buyers may turn to a wait-and-see stance, just-in-time procurement may decrease, and market trading activity may pull back. Market participants are advised to monitor the risk of negative feedback on the demand side amid the combined effects of high copper prices, high backwardation, and high premiums.
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Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
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Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
Đọc thêm
Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
Tight available supply drives premiums sharply higher; caution needed over weakening downstream acceptance amid high prices and high backwardation [SMM Shanghai Spot Copper]
[SMM Shanghai Spot Copper] Looking ahead to tomorrow, available supply in the Shanghai region is expected to remain tight. Coupled with the persistent pre-holiday stockpiling demand from some downstream processing enterprises, this continues to provide strong support for spot premiums. Although some imported copper locked in at favorable SHFE/LME price ratios after the import window opened earlier is gradually arriving, the overall volume is limited. The supplementary effect on market supply is expected to be relatively modest in the short term, making it difficult to significantly ease the current supply tightness. As a result, spot premiums are expected to have further room to rise tomorrow. However, copper prices are already at elevated levels, and the backwardation spread between futures contracts has widened simultaneously. Combined with the rapid climb in spot premiums, procurement costs for downstream and end-user enterprises have increased markedly, and their acceptance of high premiums may gradually decline. If premiums continue to rise rapidly, some downstream buyers may turn to a wait-and-see stance, reducing just-in-time procurement, and market trading activity may pull back. Market participants are advised to monitor the risk of negative feedback on the demand side amid the combined effects of high copper prices, deep backwardation, and elevated premiums.
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