SMM Copper Morning Comment

LME copper prices opened at $8,471/mt and closed at $8445/mt in overnight trading, a drop of 0.07%, with the low-end of $8408/mt and the high-end of $8496.5/mt. Trading volume was 19,000 lots and the open interest stood at 267,000 lots. The most active SHFE 2401 copper contract prices opened at 68200 yuan/mt and closed at 67990 yuan/mt last evening, down 0.23%, with the high-end of 68330 yuan/mt and the low-end of 67900 yuan/mt. Trading volumes stood at 28,000 lots and open interest stood at 164,000 lots.

On the macro front, the U.S. economic growth rate in the third quarter was higher than market expectations, and the U.S. dollar index stopped falling and rebounded. The market is waiting for the upcoming PCE data, which will guide the subsequent trend of copper prices. In terms of fundamentals, the premiums and discounts in East China fell yesterday. Although production cut at some refineries led to tight supply, with the supply supply in the north being replenished and the market price running at a high level, downstream purchasing was weak, weighing on premiums and discounts; inventories in South China gradually increased as the supply of imported copper and domestic copper grew. High spot quotes forced many processing companies to reduce or suspend production. Sellers lowered prices, but the overall transaction volume was quiet. In terms of consumption, high premiums and high market prices have suppressed downstream purchasing sentiment. Overall, mine-side disruptions and refinery maintenance have resulted in tight supply, and premiums and discounts will remain strong in the short term. Copper prices are expected to remain strong.