The joint production cut initiative boosts copper prices, copper prices to remain high [SMM Copper Morning Comment]

LME copper prices opened at $8835.5/mt and closed at $8872/mt overnight, with the highest of $8877/mt and the lowest of $8817.5/mt. Trading volume was 20,000 lots, and open interest stood at 310,000 lots. The most active SHFE 2405 copper contract prices opened at 72310 yuan/mt and finished at 72330 yuan/mt overnight, with the high-end of 72430 yuan/mt and the low-end of 72060 yuan/mt, up 0.21%. Trading volume was 33,000 lots, and open interest stood at 184,000 lots. On the macro front, SMM understood that the China Smelters Purchase Team (CSPT) held a general manager office meeting for the first quarter of 2024 in Shanghai on the morning of March 28. The CSPT group once again proposed a joint production reduction, recommending a production reduction range of 5-10%. This bolstered copper prices. In addition, affected by OPEC+'s production restriction policy and U.S. purchases, crude oil rose, driving up copper prices. In terms of fundamentals, there has been a certain decrease in goods on the supply side, but it is expected that the arrival volume of imported copper and domestic copper will be large next week, and the current supply is still relatively sufficient. In terms of consumption, due to the surge in copper prices, some downstream companies chose to lock in prices as soon as possible. Transactions have picked up slightly, but the overall market performance is still inactive. As of March 28, SMM copper inventory across major Chinese markets increased 3,600 mt from Monday to 390,900 mt. On the whole, driven by the news of production cuts, copper prices are expected to remain high.