COMEX copper prices were volatile last week and appeared to show tentative signs of stabilising after a rapid decline. There are two main reasons, one is that the previous rapid decline has fully priced in some of the recent pessimism, the other is that the current situation is relatively not that bad, so the downward momentum has slowed for the time being. However, this does not mean that the copper price can reverse upward, which is a relatively difficult thing, currently the Federal Reserve on June whether to raise interest rates again started to discuss, interest rate futures show that there is a 40% probability of 25BP in June, even if June does not raise interest rates, this may make the high interest rate will remain for a longer time, thus further deepening the market for the European and American recession expectations. Meanwhile, the issue of the US debt ceiling deserves attention. If there is a default, copper prices could suffer a relatively sharp shock.
Last week, the COMEX copper price curve shifted upward as a whole, and both the near and far end of the price curve maintained contango structure. North American inventory delivery has slowed recently, with stocks unchanged at zero for several consecutive trading days, but overall overseas refined copper inventories are increasing. Therefore, although COMEX inventory is still low, the market is not very enthusiastic to participate in the borrow strategy, as it is expected that inventory will increase in the later period. The current spread structure for COMEX is also heavily dependent on expectations for the US economy. If you think its resilience is very strong, then it is not appropriate to do lending, especially the current inventory is still low, lending risk is not small. But if you think that the follow-up will usher in a more serious recession, or can be appropriate layout of some lending.
