SunSirs: Poor Fundamentals, the Increase in Copper Prices Was Limited (June 5-9)

Price trend

As shown in the above figure, copper prices had slightly increased this week. As of the end of this week, the spot copper quotation was 67,340 RMB/ton, an increase of 1.3% from the 66,473.33 RMB/ton at the beginning of the week and a year-on-year decrease of 7.82%.

According to the weekly rise and fall chart of SunSirs, copper prices had fallen for 6 weeks and risen for 6 weeks in the past three months, with a slight rebound in recent times.

Analysis review

Macroscopically, on Tuesday, the World Bank raised its global economic growth forecast for 2023 to 2.1%, while also raising China's economic growth forecast for 2023 to 5.6% and the United States to 1.1%, which had played a certain role in boosting market sentiment. The market was more inclined towards the Federal Reserve's suspension of expectations in June, with global stock markets rising and risk appetite increasing. The trend of non-ferrous metals generally rebounded, but the rebound space was limited. However, the unexpected rate hike by the Bank of Canada had helped the Federal Reserve maintain its hawkish stance, increasing expectations for rate hikes, and there were many macroeconomic uncertainties.

Supply side: Domestic copper production further increased, with refined copper production increasing by 18.5% year-on-year in April. Global refined copper production also increased by 7.5% year-on-year in the first quarter, reaching 6.69 million tons. In addition, LME copper inventory had continued to rise recently, increasing pressure on copper prices. Inventory was still at a historical low, and there was still support for copper prices.

On the demand side: The sluggish situation in the real estate industry made it difficult to transmit short-term positive measures. For large industrial metal consumers, the continued weakness of the construction industry had a great impact on copper consumption, which had dampened the strength of copper prices. However, fortunately, the good performance of household appliances, new energy vehicles, wires and cables, and photovoltaics had driven the demand for industrial metals to be repaired.

Market outlook

In summary, there were few bullish factors on the macro level, and the domestic economic recovery was less than expected. The supply and demand side was poor, and the supply of raw materials and refined copper was becoming more uncertain. At the end of the month, imported resources are expected to flow in, while overseas demand is weak. Domestic demand is gradually entering the off-season and facing the risk of weakening. However, low inventory levels provide support for price. Although short-term copper prices are resistant to decline, there is not much room for further increase, and it is expected that copper prices will mainly fluctuate.

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