SMM Copper Morning Comment

LME copper prices opened at $8376/mt and closed at $8350.5/mt in overnight trading, a drop of 0.01%, with the low-end of $8305/mt and the high-end of $8389/mt. Trading volume was 18,000 lots, and open interest stood at 287,000 lots. The most active SHFE 2401 copper contract prices opened at 68050 yuan/mt and finished at 68000 yuan/mt overnight, with the high-end of 67740 yuan/mt and the low-end of 68090 yuan/mt, down 0.01%. Trading volume was 26,000 lots, and open interest stood at 142,000 lots. On the macro front, the U.S. non-seasonally adjusted CPI annual rate growth slowed to 3.1% as expected in November, and the month-on-month growth rate unexpectedly accelerated to 0.1%; the core CPI growth rate was 4% year-on-year, the same as in October, and the month-on-month growth accelerated to 0.3%, both In line with expectations. The higher-than-expected CPI month-on-month growth rate has, to a certain extent, dampened market expectations that the Federal Reserve will soon start cutting interest rates, and the market is waiting for Powell to speak. In terms of fundamentals, copper prices and premiums/discounts both fell back yesterday, but the price spread between front-month and next-month contracts was still large. Downstream purchasing enthusiasm was not high. According to SMM, imported copper arrived in east China, but downstream purchasing appetite was not high as delivery is approaching. Market transactions were limited, lowering premiums and discounts. Inventories in South China have increased for three consecutive days, and holders lowered prices, but downstream still believes that procurement is not cost efficient. Trading was not active. Consumption will weaken before the delivery of the SHFE front-month contract. In addition, Cobre, one of the world's largest copper mines, was asked to close, which grew supply concerns next year. Copper prices are expected to remain rangebound before the announcement of the Fed’s rate decision.