SunSirs: LME Does Not Limit the Delivery of Russian Metals, and Copper Prices Fell Slightly This Week (November 14-18)

Price trend

As shown in the figure above, copper prices fell slightly this week. By the end of this week, spot copper had offered 66,345 RMB/ton, down 1.97% from the price of 67,680 RMB/ton at the beginning of the week, down 5.79% year on year.

According to the weekly ups and downs chart of SunSirs, in the past three months, the copper price rose for 6 weeks, fell for 5 weeks, and remained unchanged for 1 week. Recently, the copper price fell slightly after the early rise.

Analysis review

Macro aspect: the joint prevention and control mechanism of the State Council: resolutely oppose the two tendencies, and continue to rectify "layer by layer"; The "big hawk" of the Federal Reserve: further interest rate hikes are required to reach the "restrictive level", at least 5% - 5.25%. So far, the impact of interest rate hikes on inflation is limited. Recently, the officials of the Federal Reserve made another hawkish statement that the Federal Reserve will further increase interest rates. The 50BP interest rate increase is also a significant increase in interest rates. Therefore, the decline of the dollar has slowed down, and copper prices are also downward under pressure.

Supply side: LME does not restrict the delivery of Russian metal, which also reduces the risk of market position squeeze. However, domestic and foreign inventories were still at a low level, and the inventory had increased slightly this week. As of the 18th, the overhaul of copper smelting enterprises in Fujian market in South China had been completed, and the output had gradually recovered. Therefore, the output of electrolytic copper will continue to increase slightly in the short term.

Demand side: The copper price rose too fast in the short term, which also hurt downstream consumption, and it was difficult to support the copper price to continue to rise significantly.

Inventory: On November 17, copper in the previous period rose 9,592 tons to 59,025 tons from the beginning of the week. LME copper inventory rose 3,125 tons to 80,025 tons, up 3.6% from the beginning of the week.

Market outlook

To sum up, the current macro environment is neutral. After the overhaul, the domestic copper output has rebounded. Although the inventory has increased, it is still at a low level, supporting the copper price. The downstream demand is general, and copper price is expected to fall into a volatile and weak pattern in the short term.

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