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Sustained Rebound, Consolidation

Viewpoint: The macroeconomic guidance is neutral. The sentiment in the non-ferrous metals sector has significantly eased, showing a weak rebound. On the supply side, TC (Treatment Charges) remains sluggish, and the strong reality of tight marginal supply of copper concentrates continues. The previous high copper prices attracted extensive illegal mining in Peru, and whether production can increase requires time to verify. Additionally, there are more reports of developing new mines, which might ease the tight supply expectations in the second half of the year. Today, the decline in SHFE (Shanghai Futures Exchange) inventory is significant, while LME (London Metal Exchange) copper inventory continues to increase. On the demand side, this month’s copper price decline has had varying effects on downstream order increments, with pessimism easing but sustainability yet to be observed. This week, the market has been consolidating around the 60-day moving average, with neither bullish nor bearish confidence being strong. Pessimism has eased, and the rebound momentum is limited but stable. There might be a slight rebound in the short term, with a range of 78,000-83,000 fluctuating consolidation. Yangtze River Nonferrous Metals predicts that today’s spot price of #1 copper will rise by 500.

June 20th: SHFE copper (including international copper) warrants decreased by 22,936 tons to 266,811 tons; LME copper inventory increased by 3,225 tons to 161,925 tons. Copper price quoted at 79,490, up 940, with a discount of 180 for the Shanghai copper July contract.

Technical Analysis: The July contract opened flat on Thursday night, hitting a low of 79,420 before rebounding to a high of 80,280, closing at 80,150 with a reduction of 4,379 lots in open interest and stable trading volume. The weighted contract opened above the 10-day and 60-day moving averages, slightly retraced to 79,715, then rebounded to a high of 80,544, closing at 80,413 with an increase of 710 lots in open interest and stable trading volume. The MACD green bars are shortening, indicating a continuous weakening of downward momentum, showing a short-term rebound trend. In the short term, it will be a strong consolidation between 78,000-83,000.

News: On June 19th, foreign media reported that Taseko Mines announced on Wednesday that it had resumed operations at its Gibraltar mine in British Columbia after a labor agreement was approved. The company announced over the weekend that it had reached an agreement with the union representing Gibraltar workers. The new agreement will be effective until May 31, 2027. Gibraltar has a large mineral reserve base, expected to support an annual average copper production of 130 million pounds until at least 2044. By 2024, the mine is expected to produce 115 million pounds of copper, with 2023 production already exceeding expectations, reaching 122.6 million pounds.

According to foreign news on June 19th, industry insiders said that this year’s surge in copper prices has led to a dramatic increase in the number of trucks transporting copper from illegal mines in Peru, clogging roads and causing accidents, creating dangerous conditions on the key “mining corridor” highway in the Andes Mountains country.

Foreign media reported that the International Copper Study Group (ICSG) released data showing that in April 2024, the global refined copper market had a surplus of 13,000 tons, compared to a surplus of 123,000 tons in March. April refined copper production was 2.29 million tons, with consumption at 2.28 million tons. From January to April 2024, the global refined copper market had a surplus of 299,000 tons, compared to a surplus of 175,000 tons in the same period last year. Adjusting for changes in China’s bonded warehouse stocks, the refined copper surplus in April was 33,000 tons, compared to a surplus of 136,000 tons in March.

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