1. Review of current copper futures market conditions
1. The risk of "economic recession" surged, and the price of copper fell below the level
Figure 1: The main 60-minute trend chart of Shanghai Copper
Copper prices continued the unilateral decline this week, and the range expanded, falling below the 70,000, 68,000, 65,000 support points one after another. , As of the closing at 3 pm on Friday, the main 2208 contract of Shanghai Copper closed at 63440 points, down 9.03% or 6300 yuan on the week. Since the Federal Reserve sharply raised interest rates by 575 basis points in the middle of the month, market concerns about economic recession erupted this week. The initial PMI values in Europe and the United States in June were both significantly lower than the previous values and expectations. Economic data verified the risk. At the same time, , Powell twice emphasized the need to raise interest rates at congressional hearings, hinting at the risk of economic recession, guiding market risks to be close to one-sided, economic risk indicators Copper prices fell fell , and the main force of Shanghai copper fell fell below the last 16 months The support level is 65,000 and maintains the downward channel. At this point, the two-year bull market in copper prices after the epidemic has basically come to an end.
(A mini program has been added here, please go to Toutiao client to view)
2． The market has continued to fall, and demand has not amplified.
Spot copper fell 5,710 yuan this week, and good copper rose 120 yuan on Friday. As of Friday, copper prices have fallen for 10 trading days in a row. Downstream stocks are being stocked at dips, but no transaction amplification has been seen. Under the influence of the inflow of imported copper, it is difficult for the price to improve. The semi-annual settlement cycle will officially enter next week. Although the market has fallen sharply , but it is difficult to raise the water premium. In terms of
import profits and losses, the exchange rate of and this week is relatively stable, the US dollar is hovering at a high level, the import profit window has reopened, and the gap is now within 100 yuan/ton.
Figure 2: The trend of electrolytic copper and price premiums and discounts
Figure 3: Import profit and loss and Shanghai-London ratio
2. Scrap market dynamics
Compared with last week, spot copper fell by about 5,700 yuan/ton, and scrap copper dropped by 5,800 yuan/ton. About tons. The price difference between fine and waste is around 810 yuan, which is an increase of ,340 yuan compared with last week.
(A mini program has been added here, please go to the Toutiao client to view)
This week's market prices continued to fall. The market sentiment showed that fell , and there were more short orders in North China. The sales of copper rods were not satisfactory, and copper factories were lowering prices. Traders raised the price to receive goods, and the quotation once exceeded that of some copper factories. The price of scrap copper fell by by ,000 yuan in consecutive days, causing panic in the market and confusing quotations. Traders who held the goods suffered excessive losses and were reluctant to sell their goods. The market was stagnant, and trading mentality was as low as freezing point. The market went down again on Friday afternoon. Traders who were reluctant to sell their goods in the early stage had to join the ranks of sellers as the market continued to fall.
Another recent feedback from traders in Nanjing, Jiangsu Province is that in the past, scrap raw materials and copper factories were traded without invoices, but the actual situation is that the copper factory registered traders as individual industrial and commercial households. Nanjing Big Data found that if there are trade transactions, traders need to pay 3 points of tax and all taxes in the previous quarter.
Copper prices have fallen sharply this week. The following is the forecast for the market trends of Shanghai Copper and London Copper this week:
- On Monday, Lagarde testified at the Economic and Monetary Affairs Committee of the European Parliament that the European Central Bank plans to make a decision at the policy meeting in July. Raise interest rates by 25 basis points "and raise interest rates again in September."
- On June 23, local time, Federal Reserve Chairman Powell testified on the semi-annual monetary policy report before the Financial Services Committee of the U.S. House of Representatives. Powell said the Fed's commitment to curbing inflation is "unconditional." "The U.S. labor market is a little unsustainably overheated, and we're too far away from our 2% inflation target," Powell said. "We really need to restore price stability and get inflation back to 2%, because without that, we won't be able to Sustained maximum employment." Powell also reiterated that the Fed still hopes to achieve a "soft landing," while also acknowledging that it will be difficult.
- Bridgewater Fund Dalio: The cost of the Federal Reserve reducing inflation will be very high, and the current policy will lead the United States to the path of stagflation.
- Musk: The U.S. economy may be in recession in the near future, and Tesla will lay off 3.5% of its employees overall.
(A mini program has been added here, please go to the Toutiao client to view)
- The initial value of the Eurozone manufacturing PMI in June was 52, expected to be 53.9, and the final value in May was 54.6. Data show that the euro zone's economic growth deteriorated sharply in June to a 16-month low, manufacturing output contracted for the first time in two years, and service industry growth dropped sharply, with the most obvious slowdown in consumer-oriented services. Companies also cut their output forecasts for the coming year to the lowest level since October 2020. Stagnant demand and worsening prospects have been widely blamed on rising living costs, tighter financial conditions and energy disruptions caused by the Russia-Ukraine conflict and the epidemic. and supply chain disruptions.
Forecast for next week: Economic recession concerns caused by the global interest rate hike broke out this week. European and American PMI data were significantly lower than the previous value and expectations, while the Federal Reserve reiterated the need for hawkish interest rate hikes and will put curbing inflation in the first place. The decline in demand expectations is particularly negative for the economic risk standard metal copper . This week fell and broke the key point of 65,000 support. So far, the copper price bull market has turned after two years; from a fundamental perspective, inventories are low but demand expectations are weak, so The support effect is actually limited. In the past two years, corporate profits have been mainly concentrated in the upstream mines and smelters, while the midstream and downstream sectors have struggled. From a technical point of view, copper prices maintain a downward channel, and the medium- and long-term support level is lowered to the 60,000 integer mark. It is expected that copper will still decline next week. Range reference: Shanghai copper is 60,000-65,000 US dollars, Lun copper is 7,900-8,500 US dollars, and scrap copper is 56,000-65,000 US dollars.
