Shanghai Copper Prices Surge Amid Low Stockpiles and Demand Optimism

News Summary: Shanghai copper prices rose 1.3% on Monday, driven by low inventory levels and expectations for improved demand following recent weak consumer activity in China.

Lead: On Monday, the Shanghai Futures Exchange reported a 1.3% increase in copper prices, closing at 67,470 yuan ($9,755.50) per tonne, as low stockpiles and hopes for increased demand following the Labour Day holiday bolstered market confidence, according to brokerage Huatai Futures.

Main Body:

Shanghai copper prices experienced a notable uptick on Monday, driven by declining inventories that provided much-needed support amid three consecutive weeks of losses attributed to weaker-than-expected demand in China. The most-traded June copper contract on the Shanghai Futures Exchange ended the day at 67,470 yuan ($9,755.50) a tonne, marking a significant turnaround in market sentiment.

In addition to copper, other metals also showed positive price movements. Aluminium rose by 0.8% to 18,460 yuan a tonne, nickel increased by 1% to 185,130 yuan a tonne, and zinc saw a notable rise of 1.8% to 21,535 yuan a tonne. Meanwhile, tin prices climbed 1.4% to 209,730 yuan a tonne, contrasting with lead, which fell by 0.3% to 15,275 yuan a tonne.

According to data from the World Bureau of Metal Statistics, copper inventories in Shanghai Futures Exchange (SHFE) warehouses fell to their lowest levels since January 13, totaling 134,919 tonnes as of Friday. This volume represents approximately just over three days of China's annual demand for copper, highlighting the tight supply situation in the market.

Market analysts assert that the bullish trend in copper prices may persist, supported by the combination of low stock levels, planned maintenance of smelters in May, and expectations of improved demand as economic activities ramp up post-Labour Day. Brokerage Huatai Futures remarked, "Copper prices will likely be upheld by low stocks and the ongoing maintenance of smelters, alongside signs of better demand."

Despite these positive developments, it's worth noting that SHFE copper prices have recorded a decline of approximately 4.9% since April 17. Concurrently, the three-month copper contract on the London Metal Exchange (LME) has seen a drop of 6.6% since April 14. The LME remains closed for a public holiday in the UK to celebrate the coronation of King Charles and is expected to resume trading on May 9.

Conclusion:

As Shanghai copper prices rebound due to low stockpiles and optimistic demand projections, market participants are encouraged to monitor supply and demand dynamics closely. The interplay of smelter maintenance, seasonal demand fluctuations, and broader economic indicators will be essential in determining the copper market's trajectory moving forward. The overall sentiment suggests that copper may well remain resilient, provided that external factors, such as global economic recovery and inventory levels, continue to align favorably for the commodity.