Macro Tailwinds Underpinned Copper Prices as BC Copper Price Spread Between Domestic and Overseas Markets Remained Inverted [SMM BC Copper Commentary]

Today, the most-traded BC copper contract 2606 opened at 92,520 yuan/mt, swung wildly in early trading, then fluctuated upward to probe 93,040 yuan/mt after the day session opened. Subsequently, the copper price center fluctuated downward to touch a low of 92,020 yuan/mt before fluctuating upward again, ultimately closing at 92,660 yuan/mt, up 0.42%. Open interest stood at 9,125 lots, down 263 lots from the previous trading day, with trading volume at 7,298 lots, indicating bears reducing positions. On the macro front, the US suspended its originally scheduled military action against Iran on Tuesday, and the US dollar index weakened, providing bullish support for copper prices; an Ebola outbreak emerged in the DRC, which has not yet affected core copper mining areas, but the market has begun to worry about the stability of the global copper ore supply chain. Fundamentals side, on the supply end, affected by concentrated maintenance at smelters, copper cathode arrivals in China decreased, compounded by limited imported copper replenishment, and the spot market supply was generally tight; on the demand end, as copper prices fluctuated at highs, downstream enterprises showed weak purchase willingness, with the market mostly maintaining rigid-demand purchases, and overall transactions showed no significant recovery.

The SHFE copper 2606 contract closed at 104,530 yuan/mt. Based on the BC copper 2606 contract at 92,660 yuan/mt, its after-tax price was 104,705 yuan/mt. The price spread between the SHFE copper 2606 contract and BC copper was -175, maintaining an inversion that continued to widen from the previous day.