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Copper Futures Slumped As US Debt Ceiling Negotiations Made Little Progress
2023-5-24
LME copper closed at $8,080.5/mt in overnight trading, a drop of 0.76%. Trading volume was 20,000 lots and open interest stood at 255,000 lots. The most active SHFE 2307 copper contract finished at 64,320 yuan/mt, down 0.57%. Trading volume was 57,000 lots and open interest stood at 194,000 lots. On the macro front, the lack of progress in talks to raise the U.S. debt ceiling dampened the market's risk appetite and raised concerns.
In addition, expectations of tighter supply in the gasoline market and a warning from the Saudi energy minister to the market raised the prospect of further OPEC+ production cuts. In terms of fundamentals, there were spot cargoes offered for sale under warrants, easing supply tightness. Import profit drove inflows of imported copper, but that did not impact the spot market. This week, the spot quotes fell but remained at a relatively high level, mainly due to sellers holding back cargoes.
In terms of consumption, the current downstream demand is insufficient, and production and sales are unbalanced under full production. Most downstream companies are bearish about the market outlook. In terms of prices, the US debt negotiations have made little progress, and the market risk appetite has declined. The US index rose, weighing on copper futures prices.
In addition, expectations of tighter supply in the gasoline market and a warning from the Saudi energy minister to the market raised the prospect of further OPEC+ production cuts. In terms of fundamentals, there were spot cargoes offered for sale under warrants, easing supply tightness. Import profit drove inflows of imported copper, but that did not impact the spot market. This week, the spot quotes fell but remained at a relatively high level, mainly due to sellers holding back cargoes.
In terms of consumption, the current downstream demand is insufficient, and production and sales are unbalanced under full production. Most downstream companies are bearish about the market outlook. In terms of prices, the US debt negotiations have made little progress, and the market risk appetite has declined. The US index rose, weighing on copper futures prices.
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