In the second quarter of 2023, the price of copper wire in the US remained stable despite various macroeconomic factors influencing its trend. Initially, there was a price rise due to an unexpected decline in the Producer Price Index, which relieved some downward pressure on copper wire manufacturing. The supply-demand rate was steady, signaling that the US government was nearing the end of an interest rate hike and would reduce it in the coming weeks. However, the market conditions took a sharp downturn in the latter half of the second quarter. Several major banks in the USA faced financial difficulties, leading to a debt crisis in the US spot market. This caused buyers to adopt a cautious approach, only purchasing based on immediate demand. On the bright side, the consumption rate of copper wire remained stable due to downstream infrastructural development and the electrification of mills for decarburization purposes.
The Asian market saw an upward price trend for copper wire in the second quarter, primarily driven by optimistic market sentiment in the Chinese copper market. Copper smelting mills in China maintained a strong production rate, supported by stable domestic consumption. The implementation of government deals and policies, coupled with rising production costs in the Chinese spot market, provided solid cost support for copper wire production. Although there was a surge in demand, the manufacturing activity did not increase to the same extent, resulting in lower inventory levels. Supply disruptions in certain domestic warehouses also helped stabilize the mills and restore them to full capacity. Additionally, the supply of copper scrap remained steady, contributing to the upward momentum of copper prices. However, the uncertain economic conditions had a slight dampening effect on the price of copper wire. Overseas countries, including the US and those in the Eurozone, banned the import of Chinese-origin commodities, including copper wire. This led to an increase in local Chinese inventory levels. Furthermore, increased import rates and subsidy policies from the Chinese government attracted more cargo shipments, which contributed to the oversupply in China. To bridge the supply-demand gap, local mills sold copper wire in surplus quantities at a lower price.
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In the German spot market, the price of copper wire remained stable in the second quarter, largely influenced by macroeconomic factors. Copper smelting mills operated at a consistent rate, ensuring a steady supply of copper wire. Buyers adopted a wait-and-watch approach, resulting in demand-driven purchases. The weakening of the US dollar played a significant role in supporting copper wire prices. It was also seen as an indication that interest rate hikes in Germany were nearing their end. Additionally, the decarburization and electrification efforts in copper smelting mills contributed to a high consumption rate and price stability. However, the purchasing power of consumers decreased, leading to a rise in local copper wire inventory levels. To address this, the German government imposed countervailing duties on cheaper copper products imported from Chinese and Asian markets. The domestic consumption rate dipped in the latter half of the second quarter due to worsening economic conditions and a recession in the German economy. This decline also affected trade conditions both domestically and overseas. The downstream automotive industry experienced a downward market trend, particularly with a decline in electric vehicle sales, resulting in an oversupply of copper wire. In response, the German government is planning to sign various deals to boost copper wire consumption and uplift the country’s economic condition.
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