SMM Copper Morning Comment: Copper prices fell overnight, market waited for more data guidance

LME copper prices opened at $8324.5/mt overnight before reaching a low of $8324.5/mt and a high of $8393/mt, and closed at $8384/mt, a rise of 1.07%. Trading volumes were 17,000 lots and open interest stood at 280,000 lots. The most active SHFE 2403 copper contract prices opened at 67700 yuan/mt and finished at 67970 yuan/mt overnight, up 0.21%, with the low-end of 67700 yuan/mt and the high-end of 68010 yuan/mt. Trading volume was 17,000 lots and open interest stood at 143,000 lots. On the macro side, yesterday the domestic central bank conducted a 1-year MLF operation of 995 billion yuan, and the winning interest rate was 2.50%, which caused some concern in the market. Coupled with the strong performance of the US dollar, copper prices fell. However, there was not much macro information last night, and copper prices experienced a certain correction, waiting for more information and guidance. In terms of fundamentals, as of Monday January 15, SMM social inventory across major Chinese markets increased by 5,700 mt to 77,700 mt from last Friday. There are two main reasons for the accumulation of inventory in East China. Many delivery warehouse receipts were put into storage last weekend, and supply from the north moved to the south, causing a slight increase in inventory. However, inventory in South China remained low with no significant changes. From the supply side, imported copper this week will decrease compared with last week, but supply from the north continues to go southward. Meanwhile, inventory has increased. It is expected that the supply of electrolytic copper will not be tight. In terms of consumption, copper prices continue to fall, and we are paying attention to whether the market will stock up before the Chinese New Year holiday. There will be limited upside room for copper prices as the US dollar weighed.