SMM Morning Comment For Copper Market On February 20

SHANGHAI, February 20 (SMM) –
LME copper prices opened at $8,426/mt on Monday, and hiked to a high of $8,466/mt in early week, but retraced down to a low of $8,424/mt towards the closing session, and finally closed at $8,427.5/mt. Trading volumes were 17,000 lots, and open interest drooped by 0.53% to 296,000 lots. The most-traded SHFE 2403 copper contract opened at 68,500 yuan/mt, and moved up to a high of 68,600 yuan/mt, but then declined to a low of 68,390 yuan/mt, and finally closed at 68,440 yuan/mt. Trading volume was 11,000 lots and open interest hiked by 0.01% to 115,000 lots.
On the macro front, with intensifying of the Red Sea incidents, crude oil prices stood high. There was little macro information and US stocks closed yesterday, and players awaited more clues. In terms of fundamentals, as of February 19, copper inventories in mainstream regions in China increased by 117,400 mt to 285,700 mt, the largest increase in six years. From the supply side, holders actively shipped stocks. In addition, more copper imports will arrive at the end of the month. Overall supply was ample. In terms of demand, in spite of restart of downstream sectors, demand will still need time to pick up. In terms of copper price, heavy inventory build-up in China weighed down copper prices. Copper prices may have difficulty hiking in a short run.