powerballhistory| It exceeded 80,000 yuan/ton, and it spread more overseas! Copper prices have not peaked yet?
This article is derived fromPowerballhistoryFutures daily
Since March, copper futures in and out of the market have continued to climb.
On the outer disk, LME copper futures closed up $142at $9876 / ton on Friday, a two-day high for nearly two years, and will rise by 4% this week.Powerballhistory.4%. In terms of internal trading, Shanghai copper closed at 80,000 yuan / ton on Friday, the highest level since 2006.
On the news side, the copper production of Chile's national copper industry Codelco, the world's largest copper supplier, fell again in April, hit by a mine accident in March.PowerballhistoryYes. It is reported that last month, due to a mine accident, Codelco's Radomiro Tomic mine suspended most of its mining activities, bringing its production to its lowest level in 20 years.
The head of the mine union said that at present, only about 1/3 of the mine transport vehicles at the Radomiro Tomic mine are in operation, and normal operation is not expected to resume gradually until early May. On the other hand, Codelco's Chuquicamata underground mine began 15 days of regular maintenance on Monday. Codelco did not comment on when the Radomiro Tomic mine will be fully reopened.
Some people in the industry believe that the transformation of green energy and the AI boom push copper prices higher. Some banks also reported that copper prices are expected to rise by 26% from current levels by 2026.Powerballhistory.5%.
In this regard, Citic Construction Investment Futures analyst Zhang Weixin told Futures Daily that based on the supply and demand outlook of copper, there is no logical problem with the long-term bullish copper, but short-term rapid rise is lack of support.
According to Zhang Weixin, the market began to trade Fed interest rate cut expectations in October 2023, and major assets around the world have reacted. From this dimension, the rise in copper since October last year is not very unique. The dominant force may come from the incentive of interest rate cuts to asset valuations. Fundamentals, from the fourth quarter of last year, TC costs continued to decline, CPST meeting decided to reduce production, coupled with the news of frequent disturbances in overseas mines, supply tightening is expected to heat up gradually, superimposed inventory itself is in a historical low range, supply and demand improvement is expected to strengthen in 2024, supply shortage becomes a more likely event. As a result, fundamentals provide support for the rise in copper prices. At the macro level, there is a strong correlation between the trend of copper prices and the trend of global PMI. Since October 2023, global manufacturing PMI has rebounded, while non-manufacturing PMI has continued to expand. In March 2024, more countries' PMI returned above the 50 rise and fall line, indicating that the global economy is experiencing a phased recovery, which also boosted the atmosphere of long copper prices in the market.
In addition, US economic data have been relatively strong so far, and the possibility of a soft landing or even direct recovery rises. If interest rates are cut at this time, coupled with the aggressive fiscal policy of the US itself, US inflation is likely to turn upward again in 2024. As a result, the transaction logic of re-inflation has been strengthened. After the Palestinian-Israeli conflict, the instability in the Middle East has attracted worldwide attention. Under the background of the rise of the wave of anti-globalization and the depression of Kangbo cycle, the possibility of geo-conflict is heating up. Copper, as one of the important commodity resources, is one of the indispensable metals in the global green energy transformation, which has a very strong strategic significance. To a certain extent, long copper has become a way to hedge the risk of geo-conflict. " Zhang Weixin added.
On the risk side, with the recent strong economic data and higher-than-expected inflation data in the United States, market expectations for the Fed's interest rate cut have been delayed again, and there may not even be any rate cut in 2024. In terms of asset performance, there has been a pullback in US stocks and Bitcoin, and gold has shown signs of peaking, but copper is still accelerating. And in the short term, the relationship between supply and demand in 2024 is not enough to drive copper prices to rise rapidly and sharply, and there is a risk of overdraft in the current rise. As a result, we are cautious about the rising space for copper prices in 2024, which is expected to continue to rise by a small margin, but in the absence of an economic crisis, it is expected that there is limited room for decline. Overall, copper prices are expected to repeat the high operating trend of 2023, and the operating hub will rise. " Zhang Weixin said.
Wu Yuxin, a German futures analyst, also believes that the macro mood in the copper market is overheated and should be treated with caution: at the macro level, US non-farm data and CPI data show that inflation is resilient, interest rate cuts are expected to be postponed again, and the number of interest rate cuts is reduced to twice, boosting the dollar index, forming a certain negative effect on copper prices, and the market is not fully priced for this. Domestic fiscal policy may be launched in the second quarter, coupled with other supporting policies will gradually fall to the ground, the follow-up economic center of gravity will continue to rise. On the supply side, TC declined and slowed down, with a large amount of centralized maintenance in the second quarter, but specific to the April reduction or limited; on the demand side, the inventory accumulation still did not show signs of ending, copper prices rose sharply downstream after the lower willingness to receive goods, negative feedback to copper rods and other enterprises, the expansion of refined copper prices also dragged down refined copper consumption; with the beginning of maintenance and demand recovery, inventory may begin to be significantly removed, but we should also pay attention to the risk that inventory elimination falls short of expectations.
On the whole, Wu Yuxin said that with the support of favorable resonance between macro and fundamentals in the second quarter, copper prices are likely to rise further; but both macro and fundamentals will usher in a realistic test, and there may be a difference in expectations. If the reality falls short of expectations, copper prices are at risk of a correction.