The copper futures market on June 11 saw Shanghai copper prices retreat from recent highs, with the overall price level shifting lower. The main July 2024 contract opened at 103,500 yuan per tonne, reaching a high of 104,340 yuan and a low of 102,640 yuan. It settled at 104,480 yuan the previous day and closed today at 103,160 yuan, down 1,320 yuan or 1.26%. Total volume for the July 2024 contract was 119,741 lots, an increase of 2,546 lots, while open interest fell by 7,494 lots to 152,405 lots. During the Asian session, London Metal Exchange copper experienced volatile, rollercoaster-like movements. As of 15:08 Beijing time, the latest quote was $13,422.5 per tonne, a decline of $26.5 or 0.20%.
Domestic spot copper prices declined for the fourth straight day. The Yangtze River spot 1# copper price was quoted at 103,770 yuan per tonne, down 800 yuan, with a premium of 100-140 yuan, up 30 yuan. The Yangtze River composite 1# copper price was quoted at 103,375 yuan per tonne, down 795 yuan, with a premium of 70-180 yuan, up 35 yuan. Guangdong spot 1# copper was quoted at 103,460 yuan per tonne, down 770 yuan, with a premium of 110-310 yuan, up 60 yuan. The Shanghai region's 1# copper price was quoted at 103,290 yuan per tonne, down 820 yuan, with a premium of 0-80 yuan, up 10 yuan.
Market Analysis
On the macroeconomic front, escalating geopolitical tensions in the Middle East, including Iran's Islamic Revolutionary Guard Corps announcing ballistic missile strikes on US bases in Jordan, have further fueled risk-aversion sentiment. The US has not yet responded. Concurrently, robust US employment data and persistent inflation have reinforced market expectations that the Federal Reserve will maintain a restrictive monetary policy for an extended period. According to the CME FedWatch Tool, the market's probability expectation for a 25-basis-point rate hike in December has risen to 43.7%. As the interest rate outlook turns more hawkish, the appeal of US dollar assets has increased, putting downward pressure on commodities. The market is closely watching the upcoming release of US May PPI data to gauge inflation persistence. Under the leadership of Fed Chair Wash, some institutions have already pushed back their rate cut expectations, with Goldman Sachs even forecasting that the first cut might be delayed until 2027.
Domestically, China's total goods trade import and export value for the first five months reached 20.68 trillion yuan, a year-on-year increase of 15.3%, with imports surging 20.5%. This better-than-expected macro data has effectively boosted market confidence and provided fundamental support for metal consumption.
Industry fundamentals present a mixed picture. Tight supply conditions persist: although mines like Canada's McIlvenna Bay and Central Asia's Kounrad are contributing incremental supply, disruptions from events like the Chile earthquake and frequent supply issues in Peru and the Democratic Republic of the Congo (DRC), coupled with the DRC raising its strategic mineral tax rate to 10%, are challenges. More critically, sulfur shortages stemming from the Middle East situation, combined with restrictions on Chinese sulfuric acid exports, are exacerbating a global "acid shortage," severely constraining the release of hydrometallurgical copper capacity. The domestic spot TC index for copper concentrate has plunged deeply below -$110 per dry metric ton, indicating unabated tightness in the raw material sector. Regarding inventories, driven by tariff expectations, global stockpiles show a significant divergence: COMEX copper inventories have climbed to 588,600 tonnes, while LME copper inventories have dropped to 369,600 tonnes. Shanghai Futures Exchange copper warehouse warrants increased slightly to 96,100 tonnes. On the demand side, traditional consumption is entering the high-temperature off-season, with outdoor infrastructure slowing and weak new orders from end-users. However, the new energy sector shows clear marginal improvement. In May, production and sales of new energy vehicles grew by 22.4% and 14.4% year-on-year respectively, with a penetration rate reaching 56.9%. Demand from photovoltaics and submarine cables also remains resilient. Furthermore, global lithium battery demand is projected to grow 35% in 2026, driving copper foil demand higher. Processing fees for second-tier customers have increased by 1,500-2,000 yuan per tonne, pointing towards a favorable outlook for both volume and profits in the copper foil segment, providing medium to long-term bullish support for copper prices.
In the spot market, domestic premiums continued to rise this week amid tight supply. The price correction has effectively stimulated downstream purchasing interest, with low-priced material being quickly absorbed. Traders' willingness to build inventory has improved, and spot purchasing during the day was reasonable. However, moving high-cost inventory remains difficult, as downstream buyers generally maintain a cautious approach of buying on dips but not chasing rallies, which has limited overall trading performance.
Overall Assessment
The copper market is currently in a period of intense tug-of-war between macroeconomic headwinds and industrial support. Despite facing short-term correction pressure, a solid floor for copper prices is being formed by the deeply negative TC in the raw material sector, supply tightening in non-US regions due to the "siphoning effect" on US-bound copper, and incremental demand support from the new energy sector. It is anticipated that the main Shanghai copper contract will maintain a pattern of high-level volatility tomorrow, with an expected trading range of 102,500 to 106,000 yuan per tonne.
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