Geopolitical Conflicts Boost Risk Aversion Sentiment, Oil Prices Rise, Driving Copper Prices Higher [SMM Copper Morning Comment]

SMM, August 13: LME copper opened at $8,960.5/mt overnight. After a slight rise at the beginning of the session, it dipped to $8,939.5/mt, then climbed throughout the session, reaching a high of $9,062/mt. It fluctuated slightly towards the end and finally closed at $9,028/mt, up 2.23%. Trading volume reached 16,000 lots, and open interest reached 283,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 72,400 yuan/mt, dipped to 72,200 yuan/mt at the beginning, then climbed throughout the session, reaching a high of 73,220 yuan/mt. It consolidated towards the end and finally closed at 72,900 yuan/mt, up 1.7%. Trading volume reached 59,000 lots, and open interest reached 168,000 lots.

Macro-wise, regarding the Middle East situation, many believe an Iranian attack on Israel is imminent. White House officials stated they are prepared for a major attack this week, boosting risk aversion sentiment. OPEC has lowered its global oil demand growth forecast for this year and next, pushing oil prices higher, which also supported copper prices. Additionally, according to external sources on August 12, Peru's copper production in June fell 11.7% YoY, which may also provide some support to copper prices.

Fundamentally, there was a significant destocking last weekend, and downstream consumption showed a clear recovery. As of Monday, August 12, SMM national mainstream copper stocks fell sharply by 19,600 mt to 318,800 mt compared to last Thursday, the largest decline in recent weeks. Overall, with rising risk aversion sentiment and some recovery in consumption, the market expects copper prices to bottom out and rebound after a series of data from China and the US are released mid-week. Copper price may be firm before the data is released.