Domestic and overseas economic data in July fell short of expectations, giving rise to market opinions that overseas economy has entered a stagflation period; meanwhile, the Fed’s meeting minutes sent out a clear signal of tapering monetary policy, depressing market sentiment noticeably. Copper led price declines and SHFE copper prices are likely to dip further.

1. TCs of imported copper concentrate rose rapidly, and are expected to stabilise due to recent strikes at mines.

2. Import premiums for warrants have surged as the SHFE/LME copper price ratio improved after the plunge in copper prices. And continued inflows of imported copper are expected in the second half of the year.

3. Electric restrictions in south China has limited supply. This, coupled with strong copper consumption, kept domestic copper cathode inventory at record lows. Domestic infrastructure construction in the second half of the year will prevent inventory from accumulating significantly.