Macro pressure is increasing unabated, and short-term Shanghai copper shocks have fallen

On the macro front, the preliminary manufacturing PMI values in Europe and the United States fell more than expected in June, indicating that the demand for industrial products contracted significantly in June, exacerbating the market's concerns
about the economic downturn.
The recent "copper-to-oil ratio" has continued to decline and has fallen to a five-year low, indicating that the risk of recession has intensified
.
Overall, in the recent tightening of liquidity and the continued fermentation of recession fears, the non-ferrous sector has fallen sharply, and copper prices have also fallen sharply
.

In terms of the market, in the week of June 24, domestic spot copper prices continued to bottom
.
According to data from Yangtze River Nonferrous Metal Network, the average price of spot 1# copper in the Yangtze River was 67298 yuan / ton, down 1142 yuan / ton per day; The average price of the previous week was 71402 yuan / ton, down 4104 yuan / ton from last week, a cumulative decline of 5.
75%.

The average price of Guangdong spot 1# copper was reported at 67064 yuan / ton, down 1102 yuan / ton per day, compared with 71444 yuan / ton in the previous week, down 4380 yuan / ton from the previous week, a cumulative decline of 6.
13%.

On the supply side, overseas copper mines are disturbed, supply worries continue, and the domestic copper smelting centralized maintenance period has come to an end, Shandong smelters are actively resuming production, and the import window is open, a large number of imported sources have poured into the market, small accumulation has appeared, and the supply increment will increase
.
Due to the tight supply of scrap copper, copper rod factories were forced to purchase raw materials at higher prices, reducing production and prolonging, and consumption shifted to fine copper rods
.
According to the latest monthly report of the International Copper Research Group, the global refined copper market had a surplus of 3,000 tons of refined copper in April 2022 and a shortfall
of 22,000 tons in March.
Global refined copper production in April was 2.
155 million mt and consumption was 2.
152 million mt
.

On the demand side, the downstream consumer market repair is not obvious, the operating rate has rebounded month-on-month but is still low compared with the same period last year, and the short-term resumption of work and production is only a weak repair
.
Under the continuous decline of copper prices, terminal orders have not yet grown, in addition, high temperatures in the north and floods in the south have also affected immediate consumption, and the overall market consumption recovery may be limited, and there is still a lack of confidence
in the sustainability of the consumption recovery.
The operating rate of copper rods fell for two consecutive weeks, the orders of the enameled wire industry fell sharply, most industries decreased year-on-year, and even some downstream situations have been very grim, and the real estate industry has not improved for the time being, and the demand side is still weak to suppress copper demand
.

In terms of inventories, Shanghai copper inventories continued to rise last week, accumulating an increase of 1,916 tons to 57,153 tons, up 3.
47%
year-on-year.
London copper stocks continued to decline last week, with a cumulative decrease of 5,000 tons to 113025 tons, a cumulative decline of 4.
24%.

Overall, macro pressure has increased, the Fed is strongly hawkish, market sentiment is extremely pessimistic, coupled with weak US economic data, causing increased recession fears, prompting a sharp decline in risk appetite, London copper fell sharply, dragging down the trend of Shanghai copper, continuing to maintain weak operation
.
However, the recovery of domestic downstream consumption is limited, and the market lacks confidence in the sustainability of the consumption recovery, coupled with the continuous recovery of domestic inventories, the support for copper prices has weakened, Shanghai copper updated a new low in the year to hit a 14-month low, and short-term Shanghai copper followed the market sentiment shock to the bottom
.