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

Macro: The Fed's March interest rate meeting announced a rate hike, in line with market expectations
.
In general, the dollar index keeps moving higher
during the US rate hike cycle.
Its internal logic is that the Fed's interest rate hike means that the US economic situation is better, attracting funds back to the United States, the world demand for the dollar increases, the dollar appreciates relative to other currencies, and the dollar index strengthens
.
Compared with the development situation of the euro area, Japan and other economies, the US economy is obviously better, and the foundation for the strengthening of the US dollar is relatively solid
.
After the Fed's interest rate hike "boots landed", the dollar index briefly retreated, in addition, domestic economic data for January-February was better than expected, which once boosted the copper market, but the Fed's dovish speech immediately boosted the dollar index to recover, and the metal trend was suppressed
.
If the United States carries out large-scale infrastructure construction, then it needs a large number of copper, building materials and other raw materials, if the dollar index strengthens, the price of these raw materials will fall, which is what the US authorities want to see, therefore, the medium-term trend of the dollar has not changed, for the rise of copper prices has a certain inhibitory effect
.

Market: March is the peak season for domestic copper consumption, and the spot copper market has recovered, but there are indications that copper demand has not increased significantly, and it still fails to meet the standard of
"peak season".
Recently, the domestic copper market is very abundant, and downstream consumers are more active in purchasing when copper prices fall, but the price rebounds slightly and turns to the sidelines, which indicates that the bearish atmosphere in the market has increased
.
From the import data, China's imports of refined copper 233856 tons in February, down 28.
83% year-on-year, the decline further expanded, indicating that the source of domestic imported copper has shrunk
compared with the previous period.
Due to the concentrated start of downstream enterprises in March, import data may improve
.
In addition, the slump in the real estate sector weighed on copper demand
.
The real estate industry has entered a low-speed growth stage, and the demand for copper will continue to be sluggish, which is one of
the reasons why the copper demand season is not strong.

Stocks: Copper stocks at home and abroad have been increasing
recently.
LME copper stocks fell back at the start of the year but increased significantly after March, with LME stocks at 309225 tonnes as of March 28, well above the beginning of the month
.
During the same period, COMEX copper stocks were 136833 tons, up more than 50% from the end of last year, and copper stocks on the Shanghai Futures Exchange were 325278 tons, up 122%
from the end of last year.
Increased inventory means that downstream demand is insufficient, and a large amount of copper is squeezed into delivery warehouses and does not enter the consumer market
.
On the demand side, with the upgrading of real estate regulation, everyone has caused further concerns
about copper demand.
On the whole, copper inventories are still at a high level, indicating that terminal demand is obviously insufficient, which is not conducive to the upward trend
of copper prices.

Aftermarket analysis: In summary, due to the recovery of copper mine strikes, supply expectations have increased, and inventories are increasing, demand is weak, and copper fundamentals are weak
.
Looking forward to the future market, China's macro economy is positive for copper prices, but if the favorable factors on the supply side recede, and domestic downstream demand is not followed up in time, the pressure on the base metal market is greater, and copper prices are expected to continue to fluctuate, but overall, April is also the peak demand season, perhaps there will be some support on the demand side
.
Copper prices are expected to fluctuate in a high and wide range in April
.