1. Copper Prices to Remain Rangebound amid Muted Fundamentals

copper is expected to move between $9,350-9,680/mt while the most-traded SHFE copper contract is estimated to stand at 68,500-70,500 yuan/mt.

On macro front, Omicron COVID-19 variant will impact the market for a long while, the Fed turned into Eagle tone, and the data from the United States mixed, the US Dollar index will remain strong. Part of the funds is about to be withdrawn from the market ahead of schedule as there is only one week away from the Christmas holiday. 

On fundamentals, low inventory is the main factor supporting copper prices. Although the supply is more abundant than before, the operating rates at smelters just maintained at around 80%. Some companies have basically entered a semi-closed state due to the completion of annual trade volume in December, resulting in a lack of market activity.

The operating rates at downstream producers remained stable. The demand is likely to decline as producers are inclined to collect funds at the end of the year. Smelters do not rush to producing as expected and imports are unlikely to increase sharply, leading to a low inventory.

Copper prices are unlikely to trend higher in the short term amid risk aversion sentiment in the market.

 

2. Trades in Copper Import Market were Quiet, Shipments Delays Plagued the Market

Last week, the overall transaction in the copper import market was muted. And the import premiums fell back.

Recently, the backwardation structure of LME copper remains high. Meanwhile, shipments have been deferred. The shipments of ILO copper which were slated to arrive in early December will arrive in late December. Most of the buyers remain cautious. Many traders have met their annual turnover targets, and lacked interest in engaging in spot trades in order not to hoard any stocks at the end of the year. The copper import market has been in oversupply. The quotes of mainstream pyro-copper under B/L, slated to arrive between late December and early January currently stand at around $100/mt. The trades were subdued. Most of the traded premiums stood at around $90/mt.

For warrants, both supply and demand were weak. The cargoes available in the market were limited. The buyers lacked buying interest against the backwardation structure of LME copper. The transactions were poor.

The copper inventories in the domestic bonded zones dipped 5,700 mt from November 26 to 183,500 mt as of Friday December 3, the eighth consecutive week of decline, according to the most recent SMM survey. The inventory in the Shanghai bonded zone decreased 4,700 mt to 169,600 mt, and the inventory in the Guangdong bonded zone fell 1,000 mt to 13,900 mt. There were inflows of cargoes under warrants which were imported when the SHFE/LME copper price ratio was profitable. The arriving shipments decreased. Meanwhile, it has been difficult for some ships to call at ports due to the strengthening of the customs' quarantine and inspection toward inbound ships. And the port work efficiency was low. As such, the bonded zone inventories continued to decline.

3. China Imports of Unwrought Copper and Copper Semis Rose 24.34% in Nov

 China imported 510,402.3 mt of unwrought copper and copper semis in November, up 24.34% from the previous month but down 9.07% from the same period last year, according to customs data.

Imports totalled 4,939,551.7 mt in the first 11 months of 2021, a year-on-year decrease of 19.9%.

4. LME Copper Inventory Stood below 80,000 mt, SHFE Copper Inventory Fell 13.74% Last Week

According to data released by the London Metal Exchange (LME), LME copper inventory declined to a nine-month low of 76,450 mt on November 30, and rebounded slightly. The latest LME copper inventory stood at 78,350 mt.

SHFE copper inventories declined 3.74% to 36,110 mt in the week ending December 3, a relatively low level in more than 12 years. The copper inventory on the Shanghai International Energy Exchange dipped 76 mt to 65,376 mt last week.

COMEX copper inventories remained largely unchanged, with the latest inventory level of 58,671 mt.