SMM Copper Morning Comment

LME copper prices opened at $8119/mt overnight before reaching a low of $8090.6/mt and a high of $8196/mt, and closed at $8187/mt, a rise of 1.9%. Trading volumes were 20,000 lots and open interest stood at 266,000 lots. The most active SHFE 2312 copper contract prices opened at 67390 yuan/mt and finished at 67490 yuan/mt overnight, up 0.76%, with the low-end of 67270 yuan/mt and the high-end of 67500 yuan/mt. Trading volume was 21,000 lots and open interest stood at 144,000 lots. On the macro front, a survey by the New York Fed showed that inflation expectations in one year fell to 3.6% from 3.7% in September, inflation expectations in three years were 3%, the same as in September, and inflation expectations in five years dropped from 2.8% in September to 2.7%. In addition, international oil prices rose to a new high since November 7 as OPEC's monthly report eased market concerns about demand, while a U.S. investigation into shipping companies suspected of violating Russian oil sanctions raised concerns about potential supply disruptions. On the fundamentals, as of November 13, SMM copper inventory across major Chinese markets decreased by 1,800 mt from last Friday to 54,500 mt. Inventories in East China have declined. Due to higher premiums and discounts in East China, refineries and importers are less willing to deliver goods to warehouses, which has led to a decrease in inventories. Inventories in South China have increased slightly, and consumer demand in the downstream of South China has been more active. Due to the large price difference between Shanghai and Guangdong, part of the supply was sent to South China. In terms of consumption, high premiums combined with high price spread between the front-month and next-month contract will dampen demand before the delivery of the SHFE front-month contract. In terms of price, affected by low inventory, copper prices have strong support.