Analysis of copper price trend in Yangtze River spot market (1.16-1.20)

On the macro front: Fed Chair Janet Yellen made hawkish speeches this week that the Fed should continue to stick to a prudent and gradual rate hike plan
.
The year-on-year increase in US CPI in December 2016 hit its highest level in two and a half years, suggesting that inflation is moving closer to the Fed's target, supporting the pace of interest rate
hikes.
Hawkish comments have put some pressure on the copper market, and copper prices are weak and volatile
.
In addition, because Trump's speech did not mention infrastructure, which suppressed market sentiment, and since Brexit seems to have no expected "hard gas", market risk aversion has heated up, which also caused copper prices to fall
.
Of course, the recent domestic capital does not support the upward
trend of copper prices.
With the Spring Festival approaching, the rising medium-term interest rate of the Shanghai Interbank Breakdown Rate also supports this view, and in the short term, the exit of funds is not conducive to the upward
movement of copper prices.

Market: The US dollar is relatively weak this week, once falling nearly 100, while metal prices have continued to fall, especially in the Chinese market, with the approach of the Spring Festival holiday, futures market funds gradually flowed, market vitality is poor, resulting in weak price volatility
.
In the spot market, the risk aversion in the market before the holiday rose, and the long funds reduced their positions and exited the market, causing copper prices to fall from last week's high, and the performance of Shanghai copper during the week was weak, and the market transaction was also significantly weakened
.
At the beginning of the week, the market transaction has been not performing well, and the holder had to reduce the discount shipment, and the good copper discount once reached about
150 yuan.
On Tuesday and Wednesday, Shanghai copper pulled back for two consecutive days, and the price fell to attract a small number of downstream enterprises to enter the market to replenish the warehouse, spot copper discount rose slightly, and market transactions improved slightly
.
On Thursday and Friday, downstream enterprises successively completed replenishment, the market vacation enterprises increased significantly, the supply and demand of the copper market were tightened, and the market transaction continued to deteriorate, but the spot copper discount was basically stable
.

In terms of stocks: LME copper stocks reported 275,400 tonnes in the week ended Jan.
20, down 6,300 tonnes weekly, the 13th week in the past 15 weeks, and the current stock hit a new low since December 14 last year, but still well above the average annual inventory of 230,000 tons in 2016, and the high of stocks during the year was 379175 tons; As of January 20, Shanghai copper stocks in the previous period reported 172979 tons, a slight increase of 2,182 tons per week, the third increase in the past four weeks, still close to the high set on September 2 last year, indicating that short-term domestic inventory pressure is still large
.
On the whole, the spot market has limited support for copper prices in the past year, and attention should be paid to avoiding the risk
of capital withdrawal at the end of the year.

Future market analysis: At present, the domestic copper market year-end effect is obvious, the performance of supply and demand is weak, market trading is mainly concentrated in the movement between traders, some speculators for long orders to replace goods and receive goods, downstream although there is pre-holiday stocking demand, but most of them have completed replenishment in the first few weeks, the purchase volume is relatively limited, basically into a state of vacation
.
In the short term, copper prices are still under pressure, especially after Trump took office, the uncertainty of the policy outlook has worried the market, and investors have heated up wait-and-see sentiment; The domestic market is approaching the Spring Festival, most copper companies began to take a holiday, the last week before the Spring Festival, a large amount of funds withdrew, domestic copper prices or weak sorting
.