The US Dollar Remains Strong and Stocks are High, Limiting Copper Price Upside Potential [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,801/mt, hit a session low of $9,777/mt at the beginning, then fluctuated upwards to a session high of $9,889/mt at the end of the trading session, and finally closed at $9,883.5/mt, with open interest at 320,000 lots. Overnight, the most-traded SHFE copper contract (2408) opened at RMB 79,670/mt, rose to a session high of RMB 80,530/mt at the beginning, then consolidated, and finally closed at RMB 80,390/mt, up 0.92%, with trading volume at 53,000 lots and open interest at 165,000 lots. On the macro front, US Fed officials reiterated that a clear inflation path is needed before cutting rates. The number of initial jobless claims in the US last week exceeded expectations, and US new home starts in May fell by 5.5%, the lowest level in four years, leading to a rise in copper prices. On the fundamentals side, on the supply side, after delivery, smelters' willingness to ship to warehouses decreased, while there were warrants being offered for sale, increasing supply. On the consumption side, as copper prices rose again, downstream consumption was suppressed, making it easier for premiums to fall than rise. As of Thursday, June 20, SMM national mainstream copper stocks decreased by 3,200 mt from Monday to 398,400 mt, and by 30,900 mt from a week ago, with the destocking speed slowing down. Overall, copper prices continued to rebound, but with a strong US dollar and high stocks, the upside potential is limited.