Copper prices strengthen as Fed pauses interest rate hike as expected

LME copper prices opened at $8106/mt and closed at $8108/mt in overnight trading, a drop of 0.14%, with the low-end of $8088/mt and the high-end of $8186.5/mt. Trading volume was 18,000 lots, and open interest stood at 262,000 lots. The most active SHFE 2312 copper contract prices opened at 67330 yuan/mt and finished at 67350 yuan/mt overnight, up 0.13%, with the low-end of 67700 yuan/mt and the high-end of 67310 yuan/mt. Trading volume was 30,000 lots and open interest stood at 153,000 lots.

On the macro front, the Federal Reserve kept interest rates unchanged. In its statement, it paid more attention to the tightening of "financial conditions" and emphasized that inflation has two-way risks. U.S. Q3 economic activity expanded at a strong rate. Powell said that the Fed is nearing the end of raising interest rates and is acting cautiously and considering whether it must raise interest rates again and is not considering cutting interest rates. In terms of fundamentals, some imported copper flowed into the domestic spot market yesterday, lowering spot premiums and discounts. However, the supply of mainstream copper was not ample. Inventories in South China have declined due to the small arrival of goods, and stocks have remained stable. Sellers raised prices, but downstream buyers maintained on-demand purchases. Spot premiums and discounts moved upward, and actual transactions were not active. In terms of consumption, copper prices have fluctuated rangebound, and the market's wait-and-see sentiment has intensified. In terms of prices, the Federal Reserve has suspended its hawkishness, and there is room for slight recovery in copper prices.