US Economic Data Exceeds Expectations, Copper Prices Decline Overnight [SMM Morning Comment]

SMM, August 30: Overnight, LME copper opened at $9,219/mt, fluctuated rangebound initially, then dipped to $9,210/mt. It experienced wide fluctuations during the session, reaching a high of $9,306/mt near the close, and finally settled at $9,272/mt, up 0.36%. Trading volume reached 17,000 lots, and open interest was 285,000 lots. The most-traded SHFE copper 2410 contract opened at 73,820 yuan/mt, dipped to 73,550 yuan/mt initially, fluctuated rangebound during the session, and climbed to a high of 74,210 yuan/mt near the close, finally settling at 74,110 yuan/mt, down 0.09%. Trading volume reached 50,000 lots, and open interest was 164,000 lots.

Macro-wise, the initial jobless claims in the US recorded 231,000 last week, slightly below expectations. The revised annualized QoQ GDP growth rate for Q2 was 3%, better than market expectations. Following the release of strong US economic data, the US dollar index continued its previous day's rise, which was bearish for copper prices.
Fundamentally, on the supply side, the arrivals of imported copper were abundant this week, and traders were actively selling, increasing the supply of copper cathode in the spot market. On the demand side, as copper prices fell, downstream purchasing increased, and overall trading was good. However, the market still needs to monitor the subsequent copper price trends. According to the SMM survey, as of Thursday, August 29, copper stocks in major regions across China decreased by 4,000 mt from Monday to 279,000 mt, and also decreased by 4,000 mt compared to last Thursday, marking the eighth consecutive week of weekly destocking, although the destocking speed has slowed. Total stocks were 190,000 mt higher YoY compared to 89,000 mt last year. In terms of prices, the downside space for copper prices is expected to be limited.