Geopolitical Risk Optimism Grew, the Most-Traded BC Copper Contract Closed Up 0.78% [SMM BC Copper Review]

Today, the most-traded BC copper 2605 contract opened at 90,550 yuan/mt, touching a low of 90,460 yuan/mt at the beginning of the session before the center fluctuated upward. It touched a high of 91,580 yuan/mt near the close and ultimately settled at 91,460 yuan/mt, up 0.78%. Open interest stood at 6,834 lots, an increase of 178 lots from the previous trading day, while trading volume was 3,856 lots, a decrease of 2,382 lots from the previous trading day. On the macro front, market optimism grew over the prospect of the Middle East conflict nearing an end, as Pakistan's mediation representatives arrived in Tehran, and the Trump administration also released signals that a US-Iran deal could be reached, improving expectations for passage through the key Strait of Hormuz shipping lane. Meanwhile, Trump urged Powell to step down as soon as possible, accelerated the confirmation process for Fed nominee Warsh, and stated that interest rates are expected to be cut after he takes office. Overall, expectations for a new round of US-Iran peace talks were in line with market consensus, and copper prices stabilized accordingly. Fundamentals side, supply side, imported copper arrivals maintained the previous pace, while domestic copper arrivals remained relatively low. Demand side, downstream enterprises mainly made just-in-time procurement, restocking on an as-needed basis. Inventory side, as of Thursday, April 16, SMM copper inventories in major regions nationwide fell 11.46% WoW from the previous Thursday, with total inventories up 49,400 mt YoY. Inventories continued destocking for the fifth consecutive week.

The SHFE copper 2605 contract closed at 102,680 yuan/mt. Based on the BC copper 2605 contract price of 91,460 yuan/mt, the after-tax price was 103,350 yuan/mt. The price spread between the SHFE copper 2605 contract and BC copper was -670 yuan/mt, showing an inverted spread that widened from the previous day.