Global Copper Wire Prices Face Decline Amid Strong Dollar and Weak Demand

During the third week of May, Copper Wire prices experienced a decline in the global market, influenced by various factors. A primary driver was the strengthening of the US dollar, which reached a seven-week high, impacting the dynamics of the Copper Wire market. Furthermore, inventories in Exchange market warehouses continued to rise, further exacerbating the situation. Market participants are closely monitoring the inflow of imported copper to determine if it can alleviate the tight spot supply.

Despite easing the debt ceiling issue in the United States, concerns about the financial market persist, resulting in expectations of low Copper Wire prices due to weak fundamental support. Sellers responded by easing the debt ceiling issue by raising their prices for Copper Wire, but downstream purchases fell short of expectations. Consequently, Copper Wire prices observed a decline this week. In terms of demand, the power transmission and distribution sector, a significant user of Copper Wire, is expected to show limited changes in the short term. Above mentioned factors and weak market fundamentals have raised concerns within the Copper Wire market regarding US debt negotiations, exerting downward pressure on copper prices.

The solid economic data from the United States has contributed to reduced expectations of the US Federal Reserve implementing easing policies. This, coupled with the anticipation of a debt ceiling agreement to prevent a potential default, has led to a rebound in the US dollar index. The macroeconomic scenario plays a significant role in influencing Copper Wire prices. The ongoing debt ceiling and banking crisis have instilled increased panic among market players, resulting in a stronger risk aversion sentiment in the Copper Wire market. As a result, copper prices may experience a decline as investors shy away from risky assets like copper. Meanwhile, despite a temporary demand recovery, the Chinese economy is anticipated to slow down gradually, providing some support to Copper Wire prices in the short term.

On the market fundamental side, the Copper Wire market has overlooked a scarcity of available goods as cargoes under warrants were not offered for sale after delivery in the Chinese market. This scarcity has led to a rise in spot quotes. However, despite the rebound in copper prices, consumption has improved in South China. Additionally, the supply of copper scrap has tightened due to the slump in copper prices observed in April. This tight supply situation may impact the Refining Charges (RCs) of blister Copper. Furthermore, copper semis producers have witnessed decreased operating rates due to the slow recovery in downstream demand, resulting in a deceleration of the decline in spot Copper Wire inventory in China. As a result, ChemAnalyst predicts a downward trend in Copper Wire prices in the coming weeks, primarily driven by diminishing demand from the power transmission and distribution sector, particularly in the Asian market.