Where to begin

According to Zhi Tong Finance APP, most copper sector stocks are trading higher. As of the latest update, China Daye Non-Ferrous Metals (00661) climbed 8.62% to HK$0.126, MMG Ltd (01208) gained 8.2% to HK$9.105, CMOC Group Ltd (03993) rose 4.88% to HK$17.84, Sino Gold International (02099) advanced 4.75% to HK$224.8, and Jiangxi Copper Co Ltd (00358) increased 4.15% to HK$37.64.

Reasons behind the rally

Copper prices continue their strong momentum, with LME copper futures surging over 1.4% intraday to approach US$14,400 per tonne, just a step away from the all-time high of US$14,527.5 per tonne. Notably, the U.S. copper market's attraction persists, while LME copper inventories keep declining and domestic copper stockpiles remain at historically low levels. Additionally, U.S. July CPI figures met expectations, while retail sales data came in below forecasts, dampening expectations of Federal Reserve rate hikes.

Looking ahead

Huayuan Securities believes that with copper inventories at historically low levels and Fed rate hike expectations cooling, copper prices are likely to break higher. Over the medium to long term, insufficient capital expenditure on copper mines and frequent supply-side disruptions may shift the copper market from a balanced state to a deficit, supporting a long-term upward trend in copper prices.