US dollar index weakness combined with inventory drawdown, copper strengthens in night session at home and abroad [SMM Copper Morning Comment]

SMM, September 4: Overnight, LME copper opened at $14,236.5/mt, dipped to $14,233/mt right after the open, then drifted higher with its center rising, reaching $14,362/mt near the end of the session, and finally settled at $14,362/mt, up 0.88%. Trading volume reached 14,400 lots, and open interest stood at 265,000 lots, down 3,627 lots from the previous trading day, reflecting bear position reductions. Overnight, the most-traded SHFE copper 2610 contract opened at 109,100 yuan/mt, initially drifted higher to hit 109,210 yuan/mt, then drifted lower to 108,930 yuan/mt, and after moving sideways, finally settled at 109,110 yuan/mt, up 0.53%. Trading volume reached 32,000 lots, up 743 lots from the previous trading day, reflecting bull position additions. On the macro front, Oman rejected Iran's proposal to charge fees for the strait, and Iran struck US military bases in the UAE and Kuwait, stating the strait "lock" would not open without consent; Israel's defense minister threatened to strike Iranian infrastructure, with Middle East conflicts continuing to escalate. US initial jobless claims came in higher than expected, but the services PMI expanded strongly, showing economic resilience; US Fed's Waller said he would consider an interest rate hike if August inflation exceeded expectations, while Vance argued for an interest rate cut. Market expectations for rate hikes shifted lower, and the US dollar index closed lower, supporting copper prices. On the fundamentals side, supply-side Shanghai inventories destocked rapidly with limited arrivals, and suppliers actively sold, keeping the overall supply tight. Demand-side dip-buying was released to some extent, but lacked sustainability, returning to just-in-time purchasing during the day, with limited acceptance of high-priced cargoes. On the inventory front, as of Thursday, September 3, SMM copper inventories in mainstream regions across China fell 20,600 mt WoW to 88,900 mt, with total inventories down 51,700 mt from 140,600 mt in the same period last year. Overall, copper prices are expected to maintain a fluctuating trend with an upward bias today.