SMM Copper Morning Commentary

SMM, July 18th - LME copper contract prices opened at $8,457.5 per tonne on July 18th. After initial wide fluctuations, prices declined and reached a low of $8,428 per tonne. They then rebounded and approached a high of $8,498 per tonne near the end of the session. Finally, prices settled at $8,495 per tonne, with a trading volume of 20,000 lots and an open interest of 275,000 lots. This resulted in a decrease of 2.03%.

Overnight, the main SHFE copper contract for August 2023 opened lower at 68,270 yuan per tonne. After initial fluctuations, it reached a low of 68,130 yuan per tonne and then rebounded. Towards the end of the session, it consolidated and touched a high of 68,580 yuan per tonne. Ultimately, it closed at 68,530 yuan per tonne, with a trading volume of 38,000 lots and an open interest of 191,000 lots. This represented a decline of 0.93%.

On the macroeconomic front, the New York Fed Manufacturing Index released yesterday dropped to 1.1%, indicating a near-stagnation in manufacturing growth. The market is eagerly awaiting the release of US retail sales data for June, which is scheduled for tonight, as the US dollar weakened.

Regarding the fundamentals, as of July 17th, Monday of this week, copper inventories in mainstream regions across China increased by 8,400 tonnes to 125,400 tonnes compared to the previous Friday, according to SMM data. Specifically, the combination of high prices and the delivery period for the SHFE copper contract for July 2023 led to poor consumption performance in the spot market, resulting in inventory accumulation in various regions.

On the consumption side, the accumulation of inventory has made it difficult for holders to maintain price confidence, which will continue to suppress demand as copper prices remain high. In terms of price, the market is waiting for more US economic data to determine the future trend of copper prices. It is expected that there will be a sustained high-level range-bound trading in the near term.

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