Short-term copper market analysis from Changjiang Nonferrous Metals: The pullback in the US dollar index has provided a boost to copper prices, with London copper closing up 0.34% overnight. Better-than-expected domestic industrial data has bolstered market confidence, while consecutive declines in Shanghai copper inventories and robust spot demand offer solid support, leading to an expected rise in spot copper prices today.
In the copper futures market, the retreat from highs in the dollar index helped lift copper prices. Overnight, London copper rebounded from lower levels, with the latest closing price at $13,590 per ton, up $45 or 0.34%. Trading volume decreased by 10,067 lots to 24,202 lots, while open interest increased by 2,099 lots to 283,015 lots. On the Shanghai Futures Exchange, copper opened higher and strengthened in the evening session. The main June 2606 contract's latest closing price was 104,620 yuan per ton, up 530 yuan or 0.51%.
According to the London Metal Exchange (LME), copper inventories as of May 16 stood at 393,400 metric tons, a decrease of 2,325 metric tons from the previous trading day, down 0.59%.
Macroeconomic Overview: Easing US-Iran Tensions and Resilient Domestic Industry The US-Iran standoff shows signs of a potential breakthrough. US President Trump announced a suspension of planned military strikes against Iran, opening a window for diplomatic negotiations. Iran, through Pakistan, has submitted a new proposal focusing on a ceasefire, reopening the Strait of Hormuz, and the partial unfreezing of assets. The US side appears to have softened its stance, agreeing to partially unfreeze funds and pause oil sanctions. Although the regional ceasefire remains fragile with sporadic drone attacks, the six-week-long tensions have shown initial signs of easing. Domestically, industrial value-added from January to April increased by 5.6% year-on-year, with a 4.1% year-on-year increase in April alone and a slight month-on-month rise of 0.05%. The better-than-expected industrial data has effectively boosted market confidence.
Industry Analysis: Persistent Mine Shortages and Structural Inventory Divergence The tight supply situation in copper mines has not fundamentally improved. Domestic spot treatment charges (TC) for copper concentrate remain deeply negative, and the performance of the mining sector following Peru's energy decree is yet to be observed. Frequent supply disruptions overseas continue to support the bottom for copper prices. Inventory trends show divergence: LME inventories have seen a slight drawdown, while COMEX inventories continue to increase. Although the consecutive decline in Shanghai copper inventories has ended, overall inventories are still trending upward due to the arrival of imported copper. Following the recent price surge and subsequent pullback, the spot market has demonstrated solid support from essential demand at lower levels, with warehouse outflows decreasing.
Market Outlook: Solid Downside Support, Focus on Restocking Momentum The global shortage of copper mine supply is intensifying, with TCs operating at extremely low levels. Although the recent rebound in copper prices has dampened some speculative buying enthusiasm, domestic consumption remains resilient, and downstream raw material inventories are generally low. Any price correction in copper is expected to effectively stimulate industrial restocking demand, thereby providing a floor for prices. In the medium term, AI data centers, power grid investments, and the new energy sector will continue to drive global copper consumption growth. Coupled with expectations of US stockpiling due to the high CL spread, the overall fundamentals for copper remain positive. Spot copper prices are expected to stabilize and rise today. The reference price range for today is 104,000-105,500 yuan per ton.
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