DRC export ban triggers supply concerns, rising interest rate hike expectations cause copper prices to retreat after rapid rise [SMM Copper Morning Comment]

SMM August 7 News: Overnight LME copper opened at $14,268/mt, edged up to $14,270/mt after the open, then consolidated and pulled back to a low of $14,055/mt, before closing at $14,092.5/mt, down 0.40%. Trading volume was 27,800 lots, and open interest increased to 254,000 lots, up 1,610 lots from the previous trading day, with bears adding positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,130 yuan/mt, touched a high of 108,250 yuan/mt and a low of 107,310 yuan/mt, and closed at 108,160 yuan/mt, up 0.36%. Trading volume was 100,100 lots, and open interest fell to 214,300 lots, down 2,426 lots from the previous trading day, with bears reducing positions. On the macro front, the DRC announced a ban on exports of copper and cobalt concentrates; supply concerns briefly pushed LME copper higher. However, US initial jobless claims stayed below 200,000 for the third straight week, and July layoffs declined significantly while hiring plans edged up slightly, indicating the labor market remained resilient. Meanwhile, sources said if upcoming inflation data is strong, Fed Chairman Warsh may be ready to raise rates in September. Rising rate hike expectations put copper prices under pressure and pulled them back. Geopolitically, Iran’s proposed navigation agreement for the Strait of Hormuz could ban US and Israeli ships, adding more uncertainty to the prospects of the strait being open. On the fundamental side, supply side, arrivals of domestic copper and imported copper cathode have edged up recently, and the supply of materials in the market has improved slightly. Demand side, the off-season coupled with high copper prices suppressed downstream production and stockpiling demand, and spot transactions remained sluggish. As of Thursday, August 6, SMM copper inventories in major Chinese regions increased by 7,300 mt WoW from last Thursday to 119,200 mt. Total inventories were 119,200 mt, down 12,800 mt from the 132,000 mt in the same period last year. Overall, copper prices are expected to consolidate at highs today.