Analysis of copper price trend in Yangtze River spot market (5.8-5.12)

Macro: The People's Bank of China launched a 459 billion yuan MLF operation, keeping the winning interest rate unchanged, which brought a certain boost to the financial market and alleviated the panic caused by the tightening of market money flow
.
As the bank and the three associations each launched strict supervision and leverage checks, stocks and bonds were killed
.
However, the tone of the central bank is still mainly stable, and the current level of interest rates is still on the low side, so it is not possible to induce financial risks, and commodity prices will continue to come under pressure
.
In addition, the US interest rate hike in June is approaching, the market is expected to raise interest rates strongly, and the US dollar is gradually recovering, which is also bearish commodity prices
.

Market: At the beginning of this week, downstream manufacturers continued to wait and see
due to unstable copper prices and sluggish demand.
As spot premiums fell at the same time as prices fell, traders tightened supply and waited and watched
.
Since Tuesday, trading has been weak, spot copper supply is sufficient, brands are diversified, and the premium has narrowed, but downstream consumption is sluggish, shipments are very poor, and holders can only lower the premium transaction, no downstream obvious entry into the market, weak transactions, this state has been maintained until Friday
.
On Friday, although the holders actively quoted, the downstream was still mainly wait-and-see, supply and demand were slightly deadlocked, and the transaction was weak
.

Inventories: London copper inventories fell this week, with a cumulative weekly reduction of 25,275 metric tons to 329375 metric tons, a cumulative decrease of 7.
13%.

Shanghai copper inventories fell by 20,238 tonnes to 194993 tonnes this week, down about 9.
4%, to a 16-week low
.
Copper inventories have also declined significantly in anticipation of continued tight domestic liquidity in the near future, and spot market support is expected to gradually begin to strengthen
.
Since May, LME copper stocks have seen a continuous surge in stocks, coupled with high levels of stocks in China's bonded zones, suppressing the rapid decline in previously strong copper prices, but historically, similar copper inventory "conversion games" have not been uncommon every year, but only provide guidance
for short-term copper prices.
Considering that the global copper market has a high probability of maintaining a "tight balance" between supply and demand in 2017, it is expected that the main line of the future market will rely more on macro policy games and liquidity
.

Future market analysis: On the whole, the market supply side is rarely favorable support, and the current macro environment is not conducive to the rebound of copper prices, in the short term, the political uncertainty in the United States is still higher than the level that the market wants to see, and there are many political risks in Europe, and the macro news level will continue to interfere with market sentiment
.
However, due to the existence of the Belt and Road summit, it cannot be ruled out that copper prices will rebound slightly next week, and the direction breakthrough or pressure level breakthrough needs more news and market confidence, and the current commodity market bearish sentiment is strong, and it is expected that short-term copper prices will maintain a low shock pattern
.