章節 3 COPPER: Sentiment-Driven Movement Comes and Goes Quickly（4.18）
Fundamentals
Macroscopically: The U.S. April New York Fed manufacturing index was 10.8, while the expected value is -18 and the previous value was -24.6. CME Fed Watch showed that traders expect the Fed to raise interest rates by 25 basis points at its meeting in early May with a chance of up to 88.7%, ascending from 78% estimated on Friday, and the earliest rate cut should be postponed to September.
Industry: China's domestic copper concentrate imports fell 7.47% year-on-year to 2.021 million tons in March, with the cumulative YoY figure falling to an increase of 4.7%, suggesting that domestic copper concentrate is still actually on the loose side.
Inventories: This week's global copper explicit stocks declined 30,000 tons to 418,000 tons compared to last week's statistics, with LME stocks falling by up to 13,875,000 tons to 51,550,000 tons. Besides, domestic copper concentrate social stocks fell by 12,000 tons to 190,100 tons compared to last week's statistics, with bonded area social stocks decreasing by 7,300 tons to 155,800 tons.
In general, the data released last Thursday indicated an unexpected rebound in Chinese exports after five months of depreciation. However, this data contradicted other indicators, including the fastest rate of decline in ex-factory prices since June 2020. While coal and iron ore imports were strong, customs data demonstrated that China's copper purchases were falling, with imports of concentrates down 7% YoY and imports of unwrought copper down almost 20%. At the current rate, refined copper imports this year will be lower than 5.9 million tons in 2022, while concentrate shipments will also be well below 25.3 million tons in 2022.
Due to the widespread use of copper in industry, transport, construction, and power grids, the overall economic trend development was exhibited from another perspective. The Chinese economy is more of a slow, moderate growth process, and the enthusiasm regarding China-driving global growth and the easing of US or global recession may fade over time, which is a big limit to the copper price overhead. In recent days, copper prices surged to 9000 as expected and climbed to 9200, which is the result of sentiment to promote, while the recent market has been in a bearish trend, such as the slowdown starting in the downstream, poor follow-up orders of enterprises and high inventory of finished goods. Moreover, it is not necessary to be blindly optimistic or pessimistic, copper prices are under a fluctuating upward process despite the limited upper space. Meanwhile, a big rise or fall could be a chance of rebound, and the unexpected growth of New York Fed manufacturing index will support the USDX to rebound from low soon. Therefore, copper prices may be bearish, and it is recommended to go long after the retracement.
Technical Analysis
Regarding the daily chart, copper price has formed a new pattern from March. At present, copper has been retraced for 2 consecutive days near the upper area of the channel with signs of stabilization today. Nonetheless, copper is still far away from the lower area of the channel, making it risky to go long. Additionally, copper's retracement is not enough, leaving space for further plummet. Thus, it is recommended to build long positions at the lower area of the channel.
Trading Recommendations
Trading direction: Long
Entry price: 8820
Target price: 9250
Stop loss: 8600
Support: 8850/8650
Resistance: 9100/9250
