Last week, Fitch announced it was cutting the long-term foreign currency issuer default rating of the United States to AA+ from the top AAA rating, the second downgrade for the U.S. economy in more than a decade. The downgrade was due to the worsening fiscal position and governance issues in the United States, which have created uncertainty for investors.
On the copper market, there are some problems on the supply side. Although domestic processing fees remain high and copper electrolytic capacity is still being released steadily, output is limited due to smelter overhaul activities. This has led to a lack of supply in the market and exacerbated the weakness in the market.
The supply problem is matched by weakness on the demand side. Domestic copper imports fell sharply in July amid an off-season in the domestic market and with high copper prices dampening buyer sentiment. The weakness in demand has added to the uncertainty in the market, putting the copper market in a difficult position.
In Shanghai copper spot, the copper premium has declined significantly. After the impact of the typhoon, the concentration of imported goods to Hong Kong and sufficient supplies, which aggravated the oversupply problem. The price of the holder is still relatively strong, but the willingness of the receiver to replenish the high price of copper is poor. Trading performance is still weak, the market trading atmosphere is relatively depressed.
Data show that the domestic spot copper price fell for three consecutive days, and the average price of Yangtze River spot 1# copper was 68800 yuan/ton, down 410 yuan; The average price of 1# copper in Shanghai was 68,700 yuan/ton, down 400 yuan; The average price of Guangdong spot 1# copper was 68,590 yuan, down 430 yuan; Foshan spot 1# electrolytic copper plate average price of 64550 yuan/ton, down 300 yuan.
In general, the second downgrade of the United States caused uncertainty in the market, which had a certain impact on the copper market. At the same time, the imbalance between supply and demand has also exacerbated the weakness of the market. The supply side is constrained by smelter maintenance activities, while the demand side is constrained by the off-season backdrop and high copper prices. Shanghai copper spot market performance is weak, trading is not good.
Investors need to pay close attention to market dynamics and make informed investment decisions.
