Since December last year, as the US Federal Reserve has slowed down its rate hike and China has optimized its epidemic prevention policy, international copper prices have rebounded rapidly. In mid-January, copper for three-month delivery on the London Metal Exchange topped $9,000 a tonne for the first time since June 2022.
However, during the Chinese New Year (January 23 to January 27), LME copper prices traded in a tight range and did not move higher again or significantly lower. "This suggests that stronger expectations of a slower Fed rate hike are largely priced in, while prices are supported by higher expectations of a quick economic repair in China in the New Year." Exhibition Dapeng said.
Boris Mikanikrezai, head of metals research and strategy at Fastmarkets, a commodities pricing agency, said Chinese copper consumption was likely to increase in the coming months, which would drive up "speculative demand". At the same time, he noted that China's opening up would be gradual, with the underlying impact on commodity demand most likely in the second half of the year.
Looking ahead to the afternoon market, we need to pay attention to the seasonal stockpiling situation in China and the resumption of terminal work, which will verify the smooth landing of strong expectations, and will be the key to the further upside of copper prices.
Mr Chen pointed out that China's accelerating economic growth was driving prices for industrial metals. Meanwhile, demand for copper from electric cars and solar panels amid the energy transition is also supporting prices. In addition, the Federal Reserve is likely to end the interest rate hike in the first half of this year, and the restraining effect of monetary policy on commodity prices may further weaken. If South American supply disruptions abate, global copper production growth will accelerate. "On the whole, the short-term international copper price has upward momentum, but the supply increase in the pattern of copper prices in the first half of the year or ushering in a decline. "In the second half of the year, as economic conditions and demand stabilize, copper prices could turn around."
Mr Zhan expects LME copper prices to remain strong in the first quarter of this year and to hit periodic highs, based on investors' optimism about the recovery of China's domestic economy. In the whole year of 2023, the comprehensive high price suppression demand, variety replacement, upstream capacity rapid investment and construction and other fundamental factors, do not rule out the copper price presented "off-season is not weak, peak season is not prosperous" market, the center of gravity has moved down.
