copper prices fell first and then rose this week (6.8-6.12)

1、 Trend analysis

This week, copper prices first fell and then rose. As of June 12th, copper prices were reported at 104683.33 yuan/ton, up 0.47% from the beginning of the week and up 32.34% year-on-year.
In the past three months, copper prices have fallen three times and risen nine times, with a slight increase this week.
LME copper inventory
According to data released by the London Metal Exchange (LME). LME copper inventory has slightly decreased, with 367300 tons of LME copper inventory as of the weekend, down 2.5% from the beginning of the week.
Macroscopically, the US PPI surged to 6.5% year-on-year in May (with a core PPI of 4.9%), completely reversing the market’s fantasy of the Federal Reserve cutting interest rates this year and even triggering interest rate bets. However, the dramatic reversal of the “dawn of peace” in the Middle East geopolitical situation quickly reshaped the market’s risk appetite. The weakening of the US dollar, the increasing expectation of interest rate cuts, and the easing of the geopolitical situation have all contributed to the concentrated realization of the triple positive. Market risk appetite has sharply increased, and funds are running into the market to purchase goods.
Supply side: The shortage in the mining sector has not changed, and the domestic spot TC index has dropped to below -110 US dollars per dry ton. Coupled with the global “acid shortage” suppressing the production capacity of wet copper smelting, the supply rigidity has become prominent.
On the demand side: Although the current market is in a hot and off-season (with a slowdown in outdoor infrastructure and weak new terminal orders), the high momentum of new energy vehicle production and sales, as well as the structural increment brought by AI data centers, have built a solid bottom for copper prices. Copper prices have fallen to around 103000 yuan, stimulating downstream inventory replenishment and accelerating the depletion of copper inventories. This week, spot premiums have continued to widen slightly (Changjiang 1 # copper reported 103770 yuan/ton, with a premium of 100-140 yuan), confirming that “where there is ore, there is buying”. High priced goods (>105000 yuan) are still difficult to stock up, and downstream consumers generally “buy low and not chase high”.
In summary, the copper market has recently shown a pattern of multiple intertwined factors. On a macro level, although the high PPI data in the United States once raised concerns about tightening, the easing of the situation in the Middle East, the weakening of the US dollar, and the resurgence of expectations of interest rate cuts have collectively boosted market sentiment, and the willingness of funds to enter the market has significantly increased. The supply side is still tight, and the deep negative value of ore processing fees reflects the shortage of mineral resources. Coupled with the global acid shortage, which inhibits wet copper smelting, the supply elasticity is extremely low. In terms of demand, although it is in the traditional off-season with a slowdown in outdoor construction and few new orders, new energy vehicles and AI data centers continue to bring structural growth, providing bottom support for copper prices. After the copper price dropped to around 103000 yuan per ton, downstream companies took the opportunity to replenish inventory, leading to a rapid decline in inventory and an expansion of spot premiums; However, once the price rises above 105000 yuan, downstream consumers are generally watching and unwilling to chase higher prices. Overall, copper prices have strong support below, but the upward potential is limited by high prices suppressing demand.