SMM Copper Morning Comment

LME copper prices opened at $8547.5/mt and closed at $8586/mt in last evening trading, a gain of 1.37%, with the low-end of $8526/mt and the high-end of $8630/mt. Trading volume was 21,000 lots, and open interest stood at 283,000 lots. The most active SHFE 2401 copper contract prices opened at 68710 yuan/mt and finished at 68860 yuan/mt overnight, up 0.55%, with the low-end of 68690 yuan/mt and the high-end of 69260 yuan/mt. Trading volume was 30,000 lots and open interest stood at 132,000 lots. On the macro front, a spokesman for the Houthi armed forces warned that an operation may be carried out in the Red Sea every 12 hours. There are market rumors that the United States will launch a military strike. Crude oil rose sharply, which also drove copper prices higher. In terms of fundamentals, from the supply side, although domestic social stocks of copper increased slightly at the beginning of the week, and imported copper gradually arrived in the middle of the week, copper supply during the week may tighten due to the time required for customs clearance and the current acceptable downstream consumption. In addition, it is understood that the earthquake in Gansu has no direct impact on the production of surrounding copper refineries, but due to the continued heavy snowfall in the northwest, transportation has been delayed; in terms of consumption, after the prices fell slightly yesterday, it stimulated downstream procurement demand. But due to the sharp drop in copper prices last night, it is expected that market demand will be suppressed to some extent. Due to the influence of macro sentiment, copper prices will move strongly in the near future.