US Dollar Index Strength Pressures Copper Prices, BC Copper Most-Traded Contract Closes Lower [SMM BC Copper Commentary]

SMM, January 2: Today, the most-traded BC copper 2502 futures contract opened lower and moved downward, starting at 64,910 yuan/mt, closing with a bearish candlestick as the lower shadow pierced the lower Bollinger Band. During the morning trading session, the most-traded BC copper 2502 futures contract opened lower with a gap and hit bottom at 64,570 yuan/mt following an increase in short positions, then rebounded with the center reaching a high of 64,930 yuan/mt. In the afternoon trading session, the most-traded BC copper 2502 futures contract fluctuated within the range of 64,780-64,910 yuan/mt, eventually closing at 64,810 yuan/mt, down by 490 yuan/mt or 0.75%. The decline was mainly attributed to an increase in short positions, with open interest reaching 7,237 lots, up by 323 lots compared to the previous trading day, while trading volume totaled 4,399 lots, down by 3,576 lots from the previous trading day.

Macro side, the decline in expectations for US Fed interest rate cuts within the year, along with uncertainties surrounding the future US economy and trade, pushed the US dollar index to a nearly two-year high. Additionally, the weakening of the A-share market during the day dampened market confidence, leading to a volatile decline in copper prices.

The SHFE copper 2502 futures contract closed at 73,280 yuan/mt. Based on the BC copper 2502 futures contract price of 64,810 yuan/mt, its post-tax price is approximately 73,235 yuan/mt. The price spread between the SHFE copper 2502 futures contract and the BC copper 2502 futures contract was 45 yuan/mt, reversing from a discount to a premium.