1. Trend analysis

According to the monitoring data of SunSirs, copper prices fluctuated widely in May. At the beginning of the month, the copper price was 77,996.67 RMB/ton, and at the end of the month, the copper price fluctuated to 78,556.67 RMB/ton, with an overall increase of 0.72%, a year-on-year decrease of 7.05%.

According to the SunSirs futures and spot chart, most of the copper spot prices in May were higher than the futures prices. The main contract is the expected price two months later, and the expected future price may be under pressure.

According to LME inventory, LME copper inventory dropped sharply in May. As of the end of the month, LME copper inventory was 162,150 tons, down 18% from the beginning of the month.

Macro aspect: Trade policies in May were repeated, and the macro fundamentals did not improve substantially. At present, there are variables in the US-EU trade negotiations. The ECB Governing Council has made it clear that attention should be paid to the downside risks of the trade war to the eurozone economy, and hinted that the interest rate meeting in June-July may suspend interest rate cuts. This statement resonates with the Fed's Kashkari's call for maintaining interest rate stability, and the rebound of the US dollar index has put short-term pressure on copper prices.

Supply side: A large copper mine in Congo stopped production due to an accident, causing market concerns about short-term supply tightening. Although the global refined copper supply margin has widened, the increase in the interference rate at the mine end and the expansion of the negative value of the spot TC (processing fee) suggest that the upstream resource tension has not been fundamentally alleviated, and the continued decline in LME inventory also proves the pressure on the supply side.

Downstream: In May, terminal consumption showed a differentiated pattern of "weak cables and strong home appliances": cable enterprise orders weakened month-on-month, reflecting the slowdown in the pace of infrastructure investment; the home appliance sector maintained production intensity due to export resilience, but the overall demand intensity was weaker than expected at the beginning of the month. High copper prices have suppressed downstream purchases, and the demand for inventory before the Dragon Boat Festival holiday is limited. The downstream only accepts low-priced sources, and the spot transaction activity is low.

According to the annual price comparison chart of SunSirs, in the past five years, copper prices have fallen more than they have risen in June, and it is highly likely that copper prices will fall in June this year.

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