Middle East Risk Aversion Sentiment Cooled, BC Copper 2606 Fluctuated and Closed Higher [SMM BC Copper Commentary]

Today, the most-traded BC copper 2606 contract opened at 89,840 yuan/mt, touching the intraday low at the beginning of the session before the price center shifted upward to 91,260 yuan/mt. It then moved sideways and ultimately closed at 90,970 yuan/mt, up 1.65%. Open interest stood at 9,358 lots, an increase of 269 lots from the previous trading day, with trading volume at 4,335 lots, indicating bulls adding positions. Macro perspective, the US Secretary of Defense confirmed the validity of the US-Iran ceasefire agreement, and Trump also stated that negotiations with Iran had made progress, cooling market risk-aversion sentiment over the escalation of Middle East geopolitical conflicts. Fundamentals side, supply side, imported and domestically produced copper cargoes arrived at ports successively, with overall supply marginally loosening; demand side, downstream players returned to the market after the holiday, but purchase willingness remained mediocre, with the market mainly focused on just-needed restocking. Inventory side, as of Wednesday, May 6, SMM copper inventories in major regions nationwide increased by 9,900 mt WoW from pre-holiday levels to 252,900 mt, with total inventory up 124,400 mt compared to the same period last year at 128,500 mt.

SHFE copper 2606 contract closed at 102,660 yuan/mt. Based on the BC copper 2606 contract at 90,970 yuan/mt, its after-tax price was 102,796 yuan/mt, resulting in a price spread of -136 between SHFE copper 2606 and BC copper. The price spread remained inverted and widened from the previous day.