SMM copper market morning comment (Mar 19)

LME copper prices opened at a low of $9,069.5/mt on Monday, and hiked to a high of $9,164.5/mt and finally closed up 0.31% at $9,102/mt. Trading volume was 290,000 lots, and open interest was 311,000 lots. The most-traded SHFE 2405 copper contract opened at a low of 73,130 yuan/mt overnight, and moved up to a high of 73,900 yuan/mt and finally closed up 1.53% at 73,460 yuan/mt. Trading volume was 98,000 lots and open interest was 232,000 lots.

On the macro side, data from the National Bureau of Statistics showed that the added value of industries above designated size increased by 7% from January to February 2024, and the total retail sales of consumer goods reached 8,130.7 billion yuan, up 5.5% YoY, assuring market players of bullish impact of pick-up of the macro data in China on copper prices. In terms of supply, large spot discounts earlier in the early stage led holders to convert a large amount of supply into warrant stocks. A focus will be put on impact of delivery of the warrant stocks on spot premiums/discounts. In terms of consumption, SMM understands that many companies had heavy piling-up of raw materials and finished goods. Copper prices will unlikely increase. In addition, as of March 18, SMM copper inventories in mainstream regions in China hiked by 6,300 mt from March 14 to 395,400 mt, the highest level in the past five years. Players will remain cautious before the release of key data. Copper prices may remain high.