SunSirs: Copper Prices Fell First and Then Rose (May 6-9)

Price trend

As shown in the above figure, copper prices rose first and then fell last week. As of this weekend, the spot copper quotation was 78,258.33 RMB/ton, an increase of 0.03% from the beginning of the week at 78,233.33 RMB/ton, a 6% increase from the beginning of the year, and a 1.7% year-on-year decline.

According to the weekly rise and fall chart of SunSirs, in the past three months, copper prices have risen slightly this week, with 4 weeks of decline and 8 weeks of rise.

LME copper inventory

According to data released by the London Metal Exchange (LME). LME copper inventory has slightly decreased, with 194,275 tons of LME copper inventory as of the weekend, down 1.73% from the beginning of the month.

Macroscopically, the Federal Reserve's May interest rate meeting maintained its interest rate decision unchanged, and Powell's hawkish remarks exceeded expectations, driving the US dollar index to its largest daily increase in nearly two weeks. Copper prices both domestically and internationally were under pressure and gave up their post holiday gains. The market continued to focus on the progress of US tariffs. Although the US government's attitude was wavering, the expected improvement will continue, especially with the short-term boost in market confidence from the US China economic and trade talks. However, it is also expected that there will be fluctuations.

Supply side: The Camoa copper mine under Ivanhoe Zijin Mining produced 50,000 tons in April, setting a new historical high. The average ore recovery rate of its third phase project has reached 87.4%. It is expected that after the completion of the underground development project in the fourth quarter, the copper grade selected by the beneficiation plant will increase to 3%. Despite the expected increase in global copper mine supply, LME and domestic explicit inventories remained low, and domestic copper spot premiums continued to remain high, reflecting a tight balance in the spot market.

On the demand side: The policy combination of the People's Bank of China may boost domestic demand, but the short-term market still faces two major concerns: first, before the clear signal of the Federal Reserve's policy shift, market risk appetite is difficult to be optimistic; The second is that there is still uncertainty in international trade negotiations. Although putting mid-term negotiations on the agenda may boost confidence, the optimistic expectations of the short-term market for the negotiation results have cooled down.

Market outlook

In summary, in the short term, the hawkish stance of the Federal Reserve, the rebound of the US dollar, and the uncertainty of trade negotiations may lead to weak copper prices; However, in the medium term, China's policy stimulus, global energy transition demand, and rigid copper mine supply may drive copper prices to gradually stabilize after fluctuations.

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