1. The short-term pressure has been concentratedly released, and the copper price is likely to continue to fluctuate and decline. On July 16th, the copper price on the overnight trading session of the London Metal Exchange (LME) closed down by 0.21% to 9,637 US dollars per ton, continuing the recent weak and fluctuating pattern. On July 17th, during the Asian trading session (Beijing time), at 10:00, the latest price was reported at 9,629.5 US dollars per ton, down by 7.5 US dollars, a decrease of 0.08%; the domestic market fluctuated repeatedly, and by 10:15, it closed at 77,930 yuan per ton, down by 0.04%. In the spot market, it was difficult to find actual transactions, and the sellers slightly raised the price, but most of the sellers were cautious in selling and offered limited discounts; the downstream enterprises made inquiries about the price infrequently, and the demand momentum was average. In the short term, the spot trading was weak. Data from the Changjiang Nonferrous Metals Network showed that the average price of 1# electrolytic copper in the Changjiang spot market was 78,120 yuan per ton, down by 70 yuan per ton compared to yesterday, with a spot premium of 190 yuan per ton, down by 30 yuan per ton compared to yesterday; the core contradiction of the current market is focused on three pressures: 1. Inventory rebound suppresses prices: The LME copper inventory increased by 10,525 tons to 108,700 tons in a single day, and the cumulative increase over the past two and a half weeks has exceeded 35%, reaching the largest increase in the year. After the protests and lockdowns in Peru were lifted, the production of Rio Tinto and Antofagasta and other mining enterprises has recovered, and the annual copper production may reach the upper end of the forecast range, weakening the speculation space of "sudden supply interruption".
2. Tariff impact shifts demand forward: Starting from August 1st in the United States, tariffs were imposed on imported copper, resulting in a significant slowdown in the flow of spot commodities that were previously "pursuing tax avoidance", and some orders could not avoid tariffs due to logistics timeliness issues, and short-term demand was over-extended. 3. The effect of the consumption off-season is evident: In China, July entered the traditional consumption off-season, and in addition, there were no significant positive drivers in the macro environment (after the China second-quarter GDP exceeded expectations, the expectation for policy stimulus cooled), the downstream purchasing intentions were cautious, and the speed of social inventory de-accumulation slowed down.
2. The medium-term demand resilience supports the price, but the downside space is limited. Although it is under short-term pressure, the downward resistance of the copper price is significant: 1. The long-term benefits of energy transition: Global power grid investment, new energy charging facilities, and green manufacturing sector demand continue to expand. China's photovoltaic installation capacity in the first half of the year increased by 30% year-on-year, driving the demand for copper used in wire and cable; the European "Power Grid Action Plan" also clearly stated that 58.4 billion euros of investment would be upgraded the power grid every year by 2030. 2. The low inventory pattern has not changed: Although the LME inventory has rebounded significantly, the global visible inventory (including bonded areas) is still at the 15% percentile of the past five years, and the domestic social inventory is only 81,500 tons, far below the historical average. The fluctuation of the US dollar index provides a rebound opportunity: The rumor of "Trump's dismissal of Powell" triggered a short-term drop in the US dollar index, although it was later clarified, but the policy uncertainty still exists. If the US dollar index falls, it will alleviate the pressure on metal prices. 3. Technical analysis and strategy suggestions: The current copper price of LME is in an oscillation range of 9,500 - 9,800 US dollars per ton, and 9,500 US dollars is the key psychological support level. If inventory continues to increase or the tariff details exceed expectations, it may fall to 9,400 US dollars; but if the new energy orders recover or domestic policies are slightly adjusted, the rebound target can be seen at 9,800 - 10,000 US dollars. The operation suggestion is: Downstream enterprises can seize the opportunity to replenish inventory in batches at 9,500 US dollars; speculators can rely on this support level to test the long position lightly, set the stop-loss at 9,400 US dollars, and pay attention to the resistance at 9,800 US dollars. Risk warnings: Adjustment of the US Federal Reserve's interest rate path, changes in the copper concentrate export policy in Indonesia, and escalation of geopolitical conflicts.
