On Tuesday, the Shanghai copper main month 2405 contract opened high in the morning, but then began to shake down at 09:30. As of 10:00, the latest offer was 72900 yuan/ton, up 0.11%. At the same time, after the London Metal Exchange (LME) opened today, the opening jumped, and in the Asian session, the latest quote at 10:00 Beijing time was 8938 US dollars/ton, up 0.74%.
Recently, the copper market has once again become the focus of investor attention. On Friday, the release of US price data opened up the possibility of the Federal Reserve cutting interest rates in June, and despite the rise in the dollar and the increase in the cost of gold, the copper market did not seem to be too affected. At the same time, the expansion of manufacturing activity in China has provided some support for copper demand. However, the high level of copper inventories in Shanghai has limited the rise of copper prices, making the copper market in a complex situation under the influence of multiple factors.
At the international level, the slowdown in US price data provides the Federal Reserve with more options for future monetary policy. Although market expectations of interest rate cuts were reduced by the manufacturing PMI data, copper investors remain wary of the future direction of monetary policy. The rise in the dollar and the rise in 10-year Treasury yields have certainly added to copper's volatility. In addition, the closure of the London Metal Exchange in recent days has also brought some uncertainty to the market.
At the same time, the expansion of manufacturing activity in China has provided a positive signal for the copper market. Activity in China's manufacturing sector expanded for the first time in six months in March, according to an official factory survey, a trend that suggests the economy is gradually stabilising, albeit at a modest pace. Customs data also showed an increase in imports of copper sands and concentrates, further supporting demand in the copper market.
However, the high level of copper inventories in Shanghai has become a stumbling block for copper prices. Inventories are almost nine times what they were at the start of the year, a staggering figure. Analysts believe that slow end-user demand and smelter output control are the main reasons for the inventory backlog. With supply relatively stable, weak demand has made it difficult for copper prices to rise much.
Entering April, the copper market transaction is expected to pick up slightly, and the sentiment of holding goods is relatively strong, superimposing the Qingming Festival is coming, and downstream enterprises have pre-holiday stock demand, which supports spot consumption. However, in the face of high premiums and high inventories, downstream transactions are still dominated by wait-and-see, and transactions are more scattered. The relatively limited upside of the premium also reflects the market's lack of confidence in rising copper prices.
Changjiang Nonferrous metals network data show that domestic spot copper prices fell slightly. Yangtze River spot 1# copper price at 72740-72780 yuan/ton, the average price at 72760 yuan/ton, slightly down 20 yuan/ton from the previous trading day.
To sum up, the current copper market is facing multiple factors such as supply disruptions, slow demand and high inventories. While the expansion of manufacturing activity in China has provided some support for the copper market, inventory pressures and weak demand continue to keep a lid on price gains. While investors are concerned about monetary policy and the global economic situation, they also need to pay close attention to the supply and demand changes and inventories in the copper market. In such a complex and volatile market, it is particularly important to maintain a rational and prudent attitude.
