Domestic Manufacturing Activity Declines, Copper Prices Under Pressure [SMM Copper Morning Comment]

Last Friday night, LME copper opened at $10,109/mt, initially fluctuating higher to a peak of $10,198/mt. It then fell to a session low of $10,020/mt, consolidated at the end of the trading session, and finally closed at $10,069/mt, with a decline of 0.55%. Trading volume reached 24,000 lots, and open interest reached 347,000 lots. Last Friday night, the most-traded SHFE copper contract opened at ¥82,290/mt, initially peaking at ¥82,680/mt, then fell to a session low of ¥81,130/mt, consolidated at the end of the trading session, and finally closed at ¥81,280/mt, with a decline of 1.14%. Trading volume reached 88,000 lots, and open interest reached 188,000 lots.

On the macro front, China's manufacturing PMI for May fell to 49.5, below the expansion-contraction line, prompting funds to liquidate more bullish positions. Additionally, Indonesia, a major copper-producing country, decided to postpone the launch of its copper concentrate export ban to the end of this year, putting pressure on copper prices. On the fundamentals side, supply remains ample, while on the consumption side, copper prices have been falling continuously, and inventories remain high. Downstream companies are bearish on the market outlook, and sellers are actively holding prices firm, leading to a heavy wait-and-see sentiment among downstream buyers, with no significant recovery in consumption. Overall, the U.S. core PCE for April hit a new low since December 2023, OPEC+ extended its "collective production cut measures" until the end of 2025, and Chile's copper production in April declined YoY, making it difficult for copper prices to continue falling.