US Dollar Index Rises, Copper Prices Plummet Overnight [SMM Copper Morning Comment]

LME copper opened at $10,605/mt overnight, initially reaching a high of $10,605/mt before trending downward. By the end of the trading session, it touched a low of $10,363/mt and finally closed at $10,396/mt, with a decline of 3.94%. Trading volume reached 36,000 lots, and open interest was at 344,000 lots. The most-traded SHFE copper contract opened at 84,500 yuan/mt, initially reaching a high of 85,080 yuan/mt before trending downward. During the session, it touched a low of 83,880 yuan/mt and closed at 84,260 yuan/mt. Trading volume reached 131,000 lots, and open interest was at 215,000 lots, with a decline of 2.79%.

On the macro front, the US Fed's May meeting Minutes showed that several officials are willing to tighten policy further if necessary. The long-run neutral interest rate may be higher than previously expected, which is bullish for the US dollar and puts pressure on copper prices. Additionally, copper cathode shipments from China to LME warehouses in Asia arrived, leading some bulls to close their positions and exit the market.

On the fundamentals, copper prices saw a correction yesterday, prompting some downstream buyers to restock at lower prices, although many remained on the sidelines, waiting for further declines. Sellers are still waiting for downstream procurement. According to SMM, inventory at some smelters has reached warehouse limits. If copper prices continue to fall, a slight market recovery is expected. In terms of prices, suppressed demand is exerting upward pressure on copper prices.