SHANGHAI, Jan 3 (SMM) - The number of US initial jobless claims added 9,000 to 225,000 two weeks ago, which was in line with market expectations. As of December 17, the number of US continued jobless claims soared to 1.7 million, the highest figure since early February 2022. The weakening of the US job market eased the market’s concerns about the US Fed’s aggressive rate hikes to a certain extent but aggravated fears about the US economic recession. In Japan, the December monetary policy meeting showed that yield curve control (YCC) must be maintained before the price target can be reached stably and sustainably. And the yen rose again to around 0.76 against the US dollar. In China, the General Administration of Customs announced to promote the orderly and steady resumption of cargo and passenger transport at border ports and to cancel the nucleic acid test results of all entry personnel from January 8, 2023. With the relaxation of COVID-19 control measures in China, the market's optimism about China's reopening has gradually subsided, and the risk appetite has decreased.
On the fundamentals, producers in some provinces in north China rushed to produce to deliver their orders with more workers who caught the COVID-19 virus returning to work. The pandemic outbreaks seriously hit the companies in the south. Besides, the copper prices remained high, which suppressed the downstream companies’ restocking. According to SMM research, as of last Friday, the social inventory stood at 18,300 mt. The import losses widened to more than 600 yuan/mt, restricting the import declarations, and the bonded zone inventory added 5,100 mt. The import window remained closed, hindering the inflow of imported copper, and the social inventory stood low. The actual terminal consumption declined amid the spread of COVID-19 outbreaks. In general, the supply and demand for copper are both weak, thus SMM believes that the short-term copper prices will remain rangebound within a narrow range.
The most-traded SHFE copper is expected to move between 65,500 -67,000 yuan/mt this week, and LME copper will trade between $8,250-8,400/mt.
In the spot market, the supply will remain tight and the demand will be weak as expected this week. The market will hardly witness cargo holders’ dumping of goods for cash in the short term. The premiums will trend higher before the delivery of the SHFE 2301 copper contract, and the spot prices are unlikely to fall amid the low domestic inventory. Spot premiums are expected to move between 120-200 yuan/mt this week.
