Geopolitical risks heat up and disturb the futures, while tight spot copper supports SHFE copper prices [SMM Copper Morning Comment]

SMM, September 1: Overnight LME copper was closed for a holiday. Overnight the most-traded SHFE copper 2610 contract opened at 109,100 yuan/mt, dipped to 109,050 yuan/mt in early trading, then shot up to a high of 109,980 yuan/mt, before drifting lower to close at 109,350 yuan/mt, up 0.62%. Trading volume reached 46,500 lots, and open interest stood at 223,000 lots, up 2,121 lots from the previous trading day, showing bullish positioning. On the macro front, the US-Iran conflict continued to escalate, with Trump threatening to "hit Iran hard," heightening geopolitical risks in the Strait of Hormuz. Trump said interest rates were too high but respected Warsh's decisions, while Treasury Secretary Bessent expected oil prices to fall and the conflict to be resolved. On the fundamentals side, available supply remained tight, with suppliers holding prices firm and the overall supply situation staying constrained. Demand was dominated by just-in-time procurement, with limited willingness to chase higher prices, though early-month restocking expectations provided some support. In terms of inventories, as of Monday, August 31, SMM copper inventories across major Chinese regions fell 12,100 mt WoW to 102,100 mt, down 30,000 mt from 132,100 mt in the same period last year. Mine supply remained tight, spot market availability was limited, and with the traditional peak season approaching and downstream restocking expectations in place, overnight copper prices shot up. Overall, copper prices are expected to consolidate on a subdued note today.