SMM Copper morning comment

LME copper prices opened at $8130/mt and closed at $8119/mt in overnight trading, a drop of 0.24%, with the low-end of $8080/mt and the high-end of $8159/mt. Trading volume was 16,000 lots, and open interest stood at 269,000 lots. The most active SHFE 2312 copper contract prices opened at 67330 yuan/mt and closed at 67330 yuan/mt last evening, down 0.15%, with the high-end of 67430 yuan/mt and the low-end of 67150 yuan/mt. Trading volumes stood at 22,000 lots and open interest stood at 155,000 lots.

On the macro front, the U.S. labor cost index in the third quarter recorded 1.1%, higher than expected and the previous value (1.00%), indicating that U.S. employment costs unexpectedly accelerated in the third quarter, exacerbating the market's concern that a strong labor market may increase inflation rate to above target. In addition, the Conference Board's consumer confidence index fell for three consecutive months. In terms of fundamentals, spot resources in East China are still not abundant. Spot premiums and discounts continued to rise yesterday. However, due to the surge in market prices, downstream purchases were as needed. Inventories in South China increased slightly yesterday, mainly due to the relatively high price of copper and weaker downstream procurement demand. But sellers were not willing to lower premiums and discounts. In terms of consumption, copper prices rose, but spot resources were not sufficient. It is expected that most companies will maintain on-demand purchases. The copper prices will meet resistance from expectations of high US dollar.