CITIC Futures: Macroeconomic risk aversion sentiment heats up, copper prices fall sharply

On the macro front, the Federal Reserve kept the federal funds target range unchanged at 3.5%-3.75%, and in its policy statement, the Fed indicated that the development of Middle East tensions’ impact on the U.S. economy remains uncertain. The overall tone was relatively hawkish, and the dollar index rebounded, putting pressure on copper prices. From the supply and demand perspective, disruptions in copper mine supply continued to increase, with spot TC for copper concentrates remaining at low levels and still declining recently, indicating that the tight copper mine supply situation has not changed. Additionally, as electrolytic copper prices have recently fallen, the price difference between refined and scrap copper has reached a historic low, showing that scrap copper supply is also tight. As raw material supply tensions become more prominent, expectations for a contraction in refined copper supply have further strengthened, with attention on subsequent overseas smelter production cuts and domestic smelter maintenance. On the demand side, as the peak season approaches, refined copper inventories have recently moved into destocking, and the copper supply and demand margin has improved. (CITIC Futures)