LME and SHFE Copper Retreated after Rapid Rise Overnight, Geopolitical Disturbances Divided Spot Structure [SMM Copper Morning Comment]

SMM, August 13: Overnight, LME copper opened at $14,230/mt. In early trading, it drifted higher to touch a high of $14,262/mt, then fell in a straight line, dipping to $14,096.5/mt near the end of trading before eventually closing at $14,109.5/mt, down 0.31%. Trading volume reached 16,900 lots, while open interest reached 263,000 lots, up 1,892 lots from the previous trading day, as bears added to positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,610 yuan/mt and immediately touched a high of 109,730 yuan/mt. It then drifted lower, dipping to 107,730 yuan/mt near the end of trading and eventually closing at 107,780 yuan/mt, down 0.36%. Trading volume reached 34,000 lots, while open interest reached 212,000 lots, down 2,364 lots from the previous trading day, as bulls reduced positions. On the macro front, US July CPI data was mild, and market expectations for the probability of a September rate hike fell to around 40%. In the Middle East, Iran said the ceasefire did not need to be extended, Pakistan said the memorandum of understanding deadline could be extended, Kuwait foiled an attack plot, and Trump claimed that the US fully controls the Strait of Hormuz. With Middle East uncertainty persisting and inflation data in line with expectations, overnight copper prices shot up and then pulled back. Fundamentals side, supply-side shipments increased near delivery, and available supply became marginally looser. However, high-quality copper remained tight, while non-registered copper supply was ample, creating overall structural divergence. Demand side, high copper prices and the off-season constrained demand, leaving it persistently weak with little improvement. Overall, copper prices are expected to move sideways with a firmer bias today.