It is about to enter the off-season of demand, and copper prices will continue to oscillate in the short to medium term. In the long run, new energy and other fields will stimulate demand in the market, and the price of copper will continue to move upward.
Recently, copper prices have shown a “roller coaster” trend. Before the Dragon Boat Festival, with better demand prospects and supply-side worries, copper prices continued to rise, and long net positions also surged. However, during the Dragon Boat Festival, as trade frictions escalated again, copper prices fell. The demand is about to enter the off-season, while overall macroeconomic data and industry data remain to be confirmed, and copper prices will continue to oscillate in the short to medium term. In the long run, new energy and other fields will stimulate demand in the market, and the focus of copper prices will move up.
Dollars keep rising channel
Before the holiday, the Federal Reserve issued an interest rate statement saying that members of the Federal Open Market Committee voted unanimously to raise the federal funds target interest rate by 25 basis points to the 1.75% to 2% range. This is the Fed’s opening of this round of interest rate hikes in December 2015. The seventh rate hike. Although in line with market expectations, the dollar still showed a pulsed rise. The strength of the US dollar has brought a big negative to its negatively related commodities.
In general, the US dollar index and copper showed a strong negative correlation. The US economy has entered a stage of better recovery. The Dow and other indexes have performed well. The spread caused by tight liquidity has attracted more funds to return to the United States, further promoting the continued recovery of the US economy. The US dollar will maintain a good upward channel. This will definitely have a strong suppression of copper prices.
Trade friction continues to escalate
On June 15, the United States announced that it would impose a 25% punitive tariff on US$50 billion in Chinese imports. On June 18, it claimed that it would impose a 10% tariff on US$200 billion of Chinese imports, and threatened to say that the US will be 376 billion. The dollar trade deficit is all subject to punitive tariffs. At the same time, the United States recently imposed steel and aluminum tariffs on the EU, Canada and Mexico, which led to the introduction of retaliatory measures in these countries. EU member states unanimously agreed to take counter-measures against US steel-aluminum tariffs. This measure will be voted on at the European Commission's regular meeting on June 20. If the adoption will be implemented as early as the day, it will be implemented at the latest in early July. The EU's temporary safeguards for global steel imports may also take effect in July.
The trade friction is constantly escalating, which will have a great impact on global commodities, the first to be the metal led by copper.
Stimulus demand in the new energy field
With the development of high technology, the fields that copper can be used are becoming more and more wide. Among them, the application of copper in the new energy field has become more and more extensive, especially the application of wind energy and solar energy equipment, which requires a large amount of copper resources. A 3MW wind turbine requires more than 1 ton of copper. Human beings have entered the high-tech era of electric vehicles, smart homes, robots and artificial intelligence. The density of motors, charging and coils has several times. If an electric car uses 50kg of copper, the corresponding charging pile uses 30kg of copper, and 10 million new energy vehicles need to consume 800,000 tons, accounting for 3%-4% of global copper consumption. The increase in copper used in automotive electronics, smart home, and industrial modernization will account for 15%-20% of global copper consumption. In addition, a quarter of the demand for copper is used for consumption, especially as the demand for copper in current high-end products continues to increase. For example, the use of brass in household items such as air-conditioning water heaters makes the product structure more excellent, and improves the product level while also bringing better sales, which further promotes the growth of copper demand, which will bring about a long-term rise in copper prices. Good promotion.
Although the internal and external market data performed well in the near future, the LME spot returned to the premium after one and a half years, and the inventory data also showed a certain decline. The CFTC net position also showed a relatively obvious increase in holdings. These are relatively market-oriented. Copper price trend. However, due to the continuous escalation of global trade frictions, the copper market will also have a greater impact. In the short and medium term, copper prices will show a wide range of oscillations in a long and short interweaving environment. However, in the long run, as the demand for the market outlook continues to increase, this will bring more boost to the copper price trend.