In the Wake of a Tense International Situation, Copper Prices Fluctuated Significantly

The crisis between Ukraine and Russia deteriorated during the past week. The market heard that Ukrainian military forces had launched mortar shells and grenades at four areas in the Luhansk People's Republic (LPR). International oil prices varied drastically because of this circumstance, and gold prices climbed swiftly, displaying a high-risk aversion mood in the market.

Copper prices changed for a brief period owing to this factor. The market is still focused on the US Federal Reserve's operations from a macro standpoint. The minutes of the FOMC meeting provided by the US Fed last week do not include any further hawkish indications. There were still some disagreements in the market over whether to raise interest rates by 25 or 50 basis points in March. Before a decision is reached, the market is anticipated to stay steady. Domestic CPI and PPI increase both slowed year over year. The CPI in China is predicted to retain a slight growth, while the PPI is expected to decrease further. Maintaining price stability will be the cornerstone of domestic macroeconomic progress in the future. As a result, in the near run, copper prices may move rangebound again if the policy is tightened overseas while the policy is eased at home.

Low, worldwide inventories on the fundamentals still dominated market movements. Domestic copper cathode production fell short of estimates, causing considerable anxiety regarding subsequent supply and inventories building in February and March. Based on the current pace of production resumption following the CNY vacation, overall consumption is unlikely to increase. Cement operating rates were said to have decreased compared to the same period last year, implying that total infrastructure and real estate operating rates could not sustain an increase in copper demand in the short term. A lack of supply is once again influencing copper prices.

This week, the most actively traded SHFE 2204 copper contract is predicted to trade between 70,500 and 72,500 yuan/metric tonnes, while LME copper is likely to trade between USD 9,850 and USD 10,200/metric tonnes.

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