Downstream consumption is flat Shanghai copper lacks sustained upward momentum

At the macro level, the Fed's interest rate decision in December announced that it would accelerate its tapering of bond purchases, and the dot plot shows that the number of rate hikes in 2022 may reach three
.
However, from the perspective of market reaction, the dollar and even U.
S.
bond yields have not rebounded significantly, especially the "indifference" of long-end U.
S.
Treasury yields, which still shows the market's concern
about the future economic outlook.
In addition, the risk of renewed energy crunch in mid-to-late December has also heightened concerns about stagflation, and the response to copper prices from the perspective of inflation expectations has been relatively positive due to the strengthening of crude oil prices in late December
.

On the supply side, TC prices hovered around $60/mt to $62/mt in December, and TC benchmark prices were negotiated at $65/mt in 2022, up from $59.
5/mt in 2021, indicating that mine supply is expected to be relatively wider in 2022, but the disruption of high freight rates, the epidemic and the possible closure of mines will remain a greater uncertainty factor in January and throughout 2022
。

On the demand side, the one-year LPR was lowered in December, and the previous real estate policy seemed to show signs
of recovery.
However, since the real estate is more related to the five-year LPR, the future performance of the real estate sector is still more uneasy
for the market.
Coupled with the influence of the Spring Festival factor, the consumption of traditional sectors such as domestic real estate and infrastructure in January 2022 is still difficult to find bright spots, and the replacement function of new energy for copper demand is a relatively medium- and long-term topic, so in the short term, demand is temporarily difficult to form an effective support
for copper varieties.
However, throughout 2022, after all, the attitude of maintaining the stability of the real estate market was revealed in the previous Central Economic Work Conference, so the possibility of demand gradually recovering after the first quarter is relatively large
.

In terms of inventory, the LME registered warehouse receipt fell to less than 18,000 tons, and on October 21, the LME also urgently modified some rules to ease the pressure that may be faced due to the low warehouse receipt, the current LME registered warehouse receipt has risen back to the level around 81,000 tons, but the current global inventory is still in a very low situation, and under such circumstances, it is still a favorable situation
for copper prices.

Overall, although the fundamentals of copper varieties are not very strong, the higher crude oil prices and energy tightness may continue to disrupt the market, and the resulting rise in inflation expectations may have a certain positive impact
on copper prices.
Overall, copper prices are expected to remain volatile.