OfBusiness Copper Dailies

8th May’23

Price

• Weekly Copper prices closed almost flat compare to last two week downward movement. LME 3month Copper was slightly down by 0.16% at $8581/mt and MCX Copper was slightly up by 0.19% at Rs.743.65/kg.
• The most active SHFE 2306 copper contract ended at 66,960 yuan/mt last Friday evening, up 0.56%. Trading volume was 49,000 lots, and open interest stood at 183,000 lots.
• Today, MCX is trading up by 0.35% at Rs.726.20, Comex is up by 0.048% at $3.8900 /pound.

Demand and Supply

• Copper stocks in Chinese markets tracked by SMM increased 4,600 mt from two Fridays ago to 168,100 mt. The current total inventory decreased 28,500 mt from before the Chinese New Year holidays and are 48,100 mt higher than the same period last year.
• This week, Chinese domestic electrolytic copper social stocks continue to be depleted.
• Though copper prices are down, downstream demand is still sluggish and not showing any sign of improvement in short term.

News

• The GDP of the United States in the first quarter was only 1.1%, which was significantly lower than expected and the previous value; in addition, the core PCE price index was 4.9%, which was higher than market expectations.
• Copper prices are under pressure due to uncertainties in the extent of future interest rate hikes and the timing of their termination.
• Chile, will resume tax reform negotiations after general election. Tax reform will have impact on Copper miner and will affect copper prices.
• April saw the lowest level of global copper smelting activity in two years as North American mills slowed down and Chinese ones were closed for maintenance. According to Earth-I, a gauge of smelter activity called the global copper dispersion index decreased from 46.8 in March to 44.0 in April. The reading in April was at its lowest level since March 2021.
• Dollar index is trading slightly down.

OFB’s Opinion

• Based on the recent decision by the Fed, it appears that a rate cut is not likely due to concerns about inflation. However, there may be a temporary pause in rate hikes. As a result, copper prices have received some support in the short term, despite sluggish demand. Nevertheless, the overall sentiment remains negative due to slow demand growth. Today, the LME is closed, but it is expected that MCX may trade within the range of Rs.737 to Rs.753. Based on these factors, it is difficult to predict the exact price of copper, but it is likely to remain relatively stable in the short term.