US Fed's Dovish Remarks, Trading Relatively Quiet Before Delivery [SMM Copper Morning Comment July 16]

Overnight, LME copper opened at $9,834/mt, initially touched a high of $9,867/mt, then fell to a session low of $9,753/mt after some fluctuations, and finally closed at $9,768/mt, down 1.10%. Trading volume reached 15,000 lots, and open interest reached 324,000 lots. Overnight, the most-traded SHFE copper 2408 contract opened at 79,330 yuan/mt, initially fluctuated upwards to a high of 79,740 yuan/mt, then fell to a session low of 79,310 yuan/mt, and finally closed at 79,390 yuan/mt, down 0.33%. Trading volume reached 22,000 lots, and open interest reached 188,000 lots.

Macro-wise, the assassination attempt on Trump significantly increased his chances of winning the election, with the market expecting his policies to benefit the dollar. The US dollar index saw some rebound, putting pressure on copper prices. Meanwhile, US Fed's Powell and other officials made dovish remarks, stating that "if the Fed waits until the inflation rate reaches 2% to cut rates, it will be too late."

According to the NBS, China's GDP grew by 5% YoY in H1. Fundamentals-wise, approaching delivery, trading was relatively quiet, maintaining only the necessary restocking. Notably, due to Fair Competition Review Regulations, the market holds certain expectations for subsequent demand for copper cathode. As of Monday, July 15, SMM's copper stocks in major regions across China decreased by 3,700 mt from last Thursday to 384,900 mt, hitting a new low since March 11, but up 259,500 mt YoY.

In summary, the US Fed's dovish remarks increased rate cut expectations, and domestic economic data showed positive signs, suggesting that copper prices are likely to remain high.