Price trend

As shown in the above figure, copper prices had slightly declined this week. As of the end of this week, the spot copper quotation was 66,463.33 RMB/ton, a decrease of 1.69% from the price of 67,603.33 RMB/ton at the beginning of the week and a year-on-year increase of 3.83%.

According to the weekly chart of ups and downs by SunSirs, in the past three months, copper prices had fallen by 5% and increased by 6%, with a slight decline in recent times.

Analysis review

According to data from SunSirs, the rise of global trade protectionism and the intensification of geopolitical risks had led to a lack of optimism in market expectations for future consumption, and investors had sold copper futures contracts one after another, causing inventory to continue to accumulate. LME copper inventory continued to rise, with the inventory reaching a high in May 2022 and rebounding to a high in nearly two years, suppressing copper prices.

Macroscopically, the geopolitical crisis overseas was gradually deepening, disrupting financial markets, and major central bank interest rates in Europe and America were stuck at high levels. The Federal Reserve's policy stance was repeated, causing market risk sentiment to be unstable. Although China's possible new round of stimulus measures had brought some optimism to the market, new concerns about China's real estate turmoil continued to suppress copper prices. Country Garden Holdings Limited, a major Chinese real estate developer, had warned that the company might not be able to repay its overseas debts. This news raised concerns among investors about a further decline in construction activity, as the real estate industry is a major consumer of copper.

On the supply side: A large amount of imported copper had arrived in China, which had an impact on the spot market. As a result, the mentality of holders had gradually shifted towards being eager to sell. In order to ship as soon as possible, all parties were competing to lower prices, resulting in oversupply in the market.

On the demand side: The demand outlook for traditional industries such as construction continued to deteriorate, and a significant increase in production will drive a considerable surplus in the market next year. The overall market performance was poor, and downstream buyers were concerned that purchasing copper would bring operational risks.

Market outlook

In summary, the continuous increase in overseas inventory, the large arrival of domestic imported copper, and the eagerness of holders to sell had all contributed to the increasingly serious problem of oversupply in the copper market. The cautious attitude of downstream buyers further exacerbated this phenomenon. Copper prices are expected to remain weak and volatile in the short term.

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