US Fed Turns Hawkish Again, Geopolitical Tensions Resurface [SMM Copper Morning Comment]

SMM, August 12: LME copper opened at $8,923.5/mt overnight, peaked at $8,950/mt in early trading, then fluctuated downward, hitting a low of $8,829.5/mt at the end of the session, and finally closed at $8,831/mt, up 0.25%. Trading volume reached 17,000 lots, and open interest reached 287,000 lots. The most-traded SHFE copper 2409 contract opened at 71,750 yuan/mt overnight, peaked at 72,150 yuan/mt in early trading, then fluctuated downward, hitting a low of 71,330 yuan/mt at the end of the session, and finally closed at 71,510 yuan/mt, up 0.12%. Trading volume reached 39,000 lots, and open interest reached 166,000 lots.

Macro side, the US Fed turned hawkish again. Fed Governor Bowman stated that inflation poses an upside risk, the labour market continues to strengthen, and a cautious stance will be maintained at the September meeting, causing copper prices to fluctuate downward. Meanwhile, the latest assessment from Israeli intelligence is that Iran has decided to directly attack Israel. Additionally, Ukraine has entered Russian territory, and the International Atomic Energy Agency has indicated that the conflict could endanger nuclear power plants, raising geopolitical conflict risks again.

Fundamentals side, from the consumption perspective, copper prices rebounded, and downstream purchasing sentiment significantly improved. Overall, with the US Fed's hawkish remarks and rising geopolitical conflict risks, copper prices are expected to remain weak and volatile.