On Wednesday, the Shanghai copper main month 2405 contract opened lower in the morning, and the disk maintained a weak pattern. At 10:00, the latest price was 72,680 yuan/ton, down 590 yuan or 0.81% from the previous trading day. Meanwhile, copper for delivery in three months on the London Metal Exchange (LME) rose slightly, last quoted at $8,979 / tonne, up just $7, or 0.08%.
At present, the overseas macro environment tends to be pessimistic, and the upcoming monetary policy meeting of the Federal Reserve has become the focus of the market. Investors are awaiting the outcome of the meeting for clear guidance on future policy direction. In addition, the recent release of US economic data revealed that inflation pressure is still significant, which led to market expectations of the Federal Reserve's first interest rate cut this year. As a result, market risk sentiment has cooled, which has had a certain impact on the demand outlook for copper, and market sentiment has also been depressed.
In the base metals market, due to the double pressure of profit taking and the strong US dollar, the market has been in turmoil, and the non-ferrous metals on the Shanghai Futures Exchange generally showed a downward trend. At the macro level, the Fed's policy meeting this week is widely expected to maintain the status quo, but given the persistence of inflation pressures, Fed Chairman Jerome Powell may adjust his forward guidance and update the outlook in the economic forecast.
More recently, the upward trend in CPI and PPI data has raised concerns that deflation has stalled or may even be reversed. As a result, the Fed is likely to adopt a more measured strategy, hold off on more accommodative monetary policy and possibly scale back the scope of future easing measures. That means the Fed could cut rates by just two quarter-point increments each by 2024, rather than the three previously expected.
At the industrial level, the new plant of Southwest Copper industry ushered in the first batch of anode copper raw materials, and it is expected that after full operation, the annual output of electrolytic copper will reach 550,000 tons. As the world's largest consumer of copper, Chinese demand has a decisive influence on the direction of copper prices. However, the recent rise in copper prices has led some copper wire companies to postpone purchases, indicating that some consumers are cautious in the face of rising prices and waiting for the right time to make purchases.
At present, the recovery of downstream demand is slow, seasonal inventory accumulation exceeds expectations, and the inventory turning point may be delayed. The situation of storage in the peak season may not be as expected. In the spot market, the downstream fear of high prices of copper is obvious, and some warehouse orders are facing outflow pressure. At the same time, the import of non-registered goods into the domestic market, resulting in the release of part of the registered warehouse receipt, further inhibiting the mainstream Pingshui copper and good copper transactions.
Yangtze River non-ferrous metal network data show that the Yangtze River spot 1# copper price of 72530-72570 yuan/ton, the average price of 72550 yuan/ton, compared with the spoof trading day fell 580 yuan/ton.
Taking the above factors into consideration, the base metal market is still facing downward pressure in the short term. Investors and traders need to pay close attention to Fed policy developments, changes in inflation, and the recovery of downstream demand in order to formulate sound investment strategies.
