COMEX June 20 Copper Roundup

New York, June 20: Copper futures on the Chicago Mercantile Exchange (COMEX) fell for a second day on Tuesday, as the dollar strengthened and China cut interest rates less than expected.

As of the close, copper futures fell by 0.45 cents to 1.70 cents, and the most actively traded July 2023 copper futures fell 0.55 cents, or 0.14%, to close at $3.8835 per pound.

July copper traded in a range of $3.837 to $3.899.

On Tuesday, the People's Bank of China lowered two benchmark lending rates, among which the one-year loan prime rate (LPR) and the five-year LPR were cut by 10 basis points each. radical. For comparison, a survey showed that 50% of respondents before the report expected a 15 basis point cut in the 5-year LPR.

The dollar rose on Tuesday, while the yuan fell after the People's Bank of China cut interest rates, meaning dollar-denominated metals were more expensive for holders of other currencies, especially buyers in top metals importer China.

Meanwhile, markets continue to focus on policy moves by other major central banks. On Monday, two policymakers at the European Central Bank advocated for further rate hikes as risks to inflation remained elevated. Markets are also awaiting testimony from Federal Reserve Chairman Jerome Powell at a congressional hearing later this week for clues on future Fed rate policy.

The recent COMEX copper futures contract has risen 6.82% so far this month and 1.92% so far this year, but Tuesday's closing price was still 4.07% lower than the same period last year and 21.31% lower than the historical peak reached in March 2022. COMEX copper futures fell by 14.6% in 2022, mainly because the outlook for global economic growth is worrying. High inflation prompted European and American central banks to actively raise interest rates to curb inflation, exacerbating the risk of economic recession. In contrast, copper has recorded two consecutive years of gains of 25% in 2020 and 2021, as the green transition of the global economy and electrification help boost additional demand for the metal, which is widely used in the power and construction industries, while copper mines face challenges. Disruptions such as underinvestment and production disruptions.

From the perspective of fund dynamics, the position data released by the U.S. Commodity Futures Trading Commission (CFTC) showed that last week, speculative funds were net long in the U.S. copper futures market for the second consecutive week, and their net positions were overturned. As of June 13, speculative funds held a net long position of 6,924 lots in the COMEX copper futures and options market. A week ago, they held a net short position of 10,965 lots, which was equivalent to a net purchase of 17,889 lots. For comparison, a net purchase of 12,074 lots last week .

The July 2023 copper contract on the Shanghai Futures Exchange closed up 70 yuan at 68,540 yuan a tonne on Tuesday. Bonded copper futures for October delivery on the Shanghai International Energy Exchange (INE) fell 30 yuan to 60,630 yuan a tonne.

On Tuesday, the trading volume of COMEX copper futures was 145,811 lots, compared with 110,567 lots in the previous trading day; the number of open positions was 206,071 lots, compared with 206,956 lots in the previous trading day.