SMM copper market morning comment (Feb 22)

LME copper prices opened at $8,541.5/mt on Wednesday, reaching a low of $8,535/mt, and kept hiking, hitting a high of $8,604.5/mt and finally closed up 0.18% at $8,546/mt. Trading volumes were 27,000 lots, and open interest was 289,000 lots. The most-traded SHFE 2404 copper contract opened at 69,230 yuan/mt, and hit a high of 69,530 yuan/mt after a low of 69,110 yuan/mt, and finally closed up 0.44% at 69,160 yuan/mt. Trading volume was 31,000 lots and open interest was 143,000 lots.

On the macro front, most officials noted the risk of cutting interest rates too quickly in the FOMC meeting, and some saw possible inflation stagnation, matching market expectations. However, US retail sales and other data also showed some weakness, and the US dollar index ticked down. In terms of fundamentals, as a slew of warrant stocks may flow into spot market on Thursday after delivery on Monday, copper cathode supply may remain ample. From a consumption perspective, rising copper prices yesterday tamed buying appetites to a certain extent. Moreover, in spite of production resumption of downstream sectors, it will still take time for demand to pick up. In a word, supply surplus may unfold recently. In terms of copper price, optimistic macro sentiment, domestic demand improvement and the release of more data are expected to keep copper prices high in the near future.