US Manufacturing PMI Contracts, Copper Prices Open Higher Overnight [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,656/mt, with the initial session seeing a rise in the trading range, peaking at $9,690.5/mt. The price then dipped, hitting a session low of $9,618/mt at the end of trading, and finally closed at $9,636/mt, up 0.52%. Trading volume reached 15,000 lots, and open interest was 327,000 lots. The most-traded SHFE copper contract for August 2024 opened at 78,760 yuan/mt, initially rising to 78,960 yuan/mt, then dipping to a session low of 78,500 yuan/mt, and finally closed at 78,730 yuan/mt, up 0.46%. Trading volume reached 44,000 lots, and open interest was 192,000 lots.

Macro-wise, the final value of the US June S&P Global Manufacturing PMI was 51.6, lower than expected and the previous value. The US June ISM Manufacturing PMI was 48.5, also lower than expected and marking the third consecutive month of contraction, with the price index showing the largest decline in a year. Meanwhile, the June Caixin China Manufacturing PMI rose to 51.8, the highest since June 2021. Copper prices received some support.

Fundamentals, supply side, recent arrivals of imported copper in Guangdong have increased, and smelters in north China are about to resume supply. Demand side, downstream consumption remains sluggish amid stable copper prices and widening price spread between the current-month and next-month contracts. As of Monday, July 1, SMM copper stocks in major regions in China increased by 8,100 mt from last Thursday to 407,200 mt, ending the destocking trend and starting to restock, with total stocks 302,200 mt higher YoY. Overall, copper prices are expected to hover around the current level today.