The Most-Traded BC Copper Contract Hit the Limit Down, Macro Headwinds and Bulls Exiting the Market [SMM BC Copper Commentary]

Today, the most-traded BC copper contract 2603 opened at 92,230 yuan/mt. At the beginning of the session, copper prices fluctuated upward, touching a high of 93,050 yuan/mt, after which the price center gradually shifted lower. After the daytime session opened, prices fluctuated downward again, eventually hitting the limit-down board and closing at 87,250 yuan/mt, a decline of 9%. Open interest reached 6,375 lots, down 85 lots from the previous trading day, while trading volume reached 17,000 lots, indicating long position liquidation. On the macro front, Trump announced the nomination of Warsh as the next US Fed Chairman, cooling market expectations for US Fed interest rate cuts and strengthening the US dollar index, which put pressure on copper prices. Meanwhile, the US signaled willingness to negotiate with Iran, with possible talks in Turkey, leading to a pullback in market risk-off sentiment and further weighing on copper prices. Additionally, market bulls took profits, and prices of precious metals such as gold and silver pulled back, also dragging on copper prices. On the fundamentals side, supply side, spot copper cathode was generally ample, with increased arrivals of domestic supply; demand side, stimulated by the sharp pullback in copper prices, downstream restocking activity increased somewhat.

The SHFE copper 2603 contract closed at 98,580 yuan/mt. Based on the BC copper 2603 contract price of 87,250 yuan/mt, its post-tax price is 98,592 yuan/mt, resulting in a price spread of -12 between the SHFE copper 2603 contract and BC copper. The spread remained inverted and narrowed significantly compared to the previous day.