SMM Copper Morning Comment

LME copper prices opened at $8600.5/mt and closed at $8570/mt in last Friday evening trading, a decline of 0.42%, with the low-end of $8564.5/mt and the high-end of $8636/mt. Trading volume was 14,000 lots, and open interest stood at 281,000 lots. The most active SHFE 2401 copper contract prices opened at 68960 yuan/mt and finished at 69080 yuan/mt overnight, up 0.04%, with the low-end of 68910 yuan/mt and the high-end of 69230 yuan/mt. Trading volume was 24,000 lots and open interest stood at 154,000 lots. On the macro front, the annual inflation rate in the United States fell further in November, and the PCE increase in November was also lower than that in October, strengthening the market's expectations for a U.S. interest rate cut in March next year. The center of gravity of the U.S. index has shifted downward, which is bullish for copper prices. In terms of fundamentals, according to SMM research, as of last Friday, December 22, copper inventories in mainstream regions across China fell by 6,700 tons to 56,600 tons from last Monday. This was mainly due to the lack of domestic copper and imported copper arrivals. There were many direct shipments from refineries to downstream buyers, which has led to a decline in inventories in most areas. From the supply side, as imported copper will continue to flow into the market this week, and refineries will clear inventories at the end of the year, there will be an increase in market supply this week. In terms of consumption, there is demand for funds from the downstream in the last week of the year-end. Combined with the impact of high copper prices, demand is expected to be under pressure. Copper price gains are unlikely to sustain.