Analysis of copper price trend in the domestic spot market in June

Macro: Abroad, the Fed's interest rate meeting in mid-June decided to raise interest rates by 25 basis points in June, which was expected by the market and had little impact on the market
.
The details of the balance sheet reduction in the speech of the Federal Reserve Chairman Yellen made the dollar index rebound from 96.
3, but the Fed's balance sheet reduction is a long-term process, not overnight, and since the beginning of this year, the market has also expected the Fed to reduce the balance sheet, and the short-term boost to the dollar is limited
.
Domestically, data show that the profits of industrial enterprises above designated size increased by 16.
7% year-on-year in May, and the growth rate was faster than that in April; China's official manufacturing PMI rebounded to 51.
7 in June, above the boom-dry line for 11 consecutive months, indicating that China's foreign companies are doing well and fears of economic slowdown have eased
.

Market: The increasing trend of copper prices has not led to an improvement in market transactions, on the contrary, due to the departure of the traditional consumption season, market demand has begun to deteriorate
.
On the supply side, the spot copper market has gradually changed from tight supply to sufficient supply this month, one of the more important reasons is that there are signs of increased copper inflows in the middle of the month
.
It can also be seen from the situation of spot copper liter discount, in the first half of the month, good copper basically showed a situation of premium, while the second half of the month has maintained a high discount level
.
From the demand side, this month's domestic demand situation is gradually deteriorating, the first half of the performance is not obvious is due to the shortage of supply, and in the second half of the month with the recovery of market supply, the poor demand is also clearly highlighted
.
At the end of the month, after the sharp rise in copper prices, there were few people entering the market downstream, and the willingness to wait and see was very strong
.

Inventory: At the end of the month, London copper stocks declined, with a cumulative weekly reduction of 9,000 metric tons to 249,700 metric tons, a cumulative decrease of 3.
48%.

Shanghai copper stocks decreased by 8,661 tonnes to 176,620 tonnes, a decrease of about 4.
67%, refreshing the lowest level
since the week of January 20, 2017.
Inventory directly reflects the supply and demand of goods
.
LME copper stocks have risen and fallen since the end of the third quarter of last year, the most recent rise was at the beginning of the month, LME Asian inventories closely related to domestic exports increased sharply, but a few days later, stocks continued to decline again, almost back to the last inventory increase point, while the last inventory fell rapidly from mid-March, as of December 23 was 148,000 tons, down nearly 50%
from the previous high.
As for domestic bonded zone inventories, as of June 23, Shanghai was 556,700 tons, down 20%
from 696,700 tons at the end of March.
Overall, the recovery in copper prices was supported by lower inventories
.

Aftermarket analysis: In the context of the recent fine-tuning of the pace of financial deleveraging and the landing of US dollar interest rate hike boots, the decline in copper inventories supports the rebound
of copper prices.
At present, the global copper inventory has further declined, coupled with the expectation of the national miners' strike in Peru, the supply side has become a driving force for copper prices, but the impact of the Peruvian strike may not be too large, and after the price recovery, the elasticity of copper supply has not disappeared, the situation of excess supply has not fundamentally improved, and copper prices lack a basis
for a sharp rise.
With the second half of the year, if the supply of copper mines re-emerges, or the demand side maintains the current good momentum, then copper prices can still be expected
to rise significantly.