[SMM Copper Morning Analysis] US June PPI falls more than expected, overnight copper surges again 

Overnight, LME copper opened lower at $8,566.5 per tonne, then rose steadily to touch a high of $8,710 per tonne during the session. It ended the day with sideways consolidation at $8,707 per tonne, with a trading volume of 26,000 lots and an open interest of 264,000 lots, resulting in a 2.27% increase. The main SHFE copper contract, 2308, opened lower at 68,970 yuan per tonne, experienced initial volatility and then rose to a high of 69,730 yuan per tonne during the session. It later consolidated sideways and closed at 69,580 yuan per tonne, with a trading volume of 47,000 lots and an open interest of 203,000 lots, resulting in a 1.65% increase.

In terms of macroeconomics, the U.S. June PPI unexpectedly dropped, recording a 0.1% decline in both the annual and monthly rates. The annual rate was the lowest in three years, providing further evidence of inflation cooling down in the United States. However, San Francisco Fed President Daly stated that it is still too early to declare that the inflation issue has been resolved, and sufficient measures must be taken to raise interest rates to a sufficiently tight level. In terms of fundamentals, the Eastern China region is still influenced by the strong backwardation guidance as delivery approaches, and imported copper continues to flow in. Spot premiums fluctuate around zero. Inventories in South China have decreased, with limited arrivals and withdrawals, and the backwardation has not narrowed. In addition to the surge in copper prices, downstream purchasing intentions are low. Despite some price reductions from holders, actual transactions are not active. Regarding consumption, rising copper prices are suppressing demand, and downstream purchasing intentions are low before delivery. It is expected that there will be some improvement after the delivery. In terms of prices, influenced by macro sentiment, the market has high expectations that the Fed will end its tightening policy, which provides momentum for copper prices to run at high levels.

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