The resilience of the US economy keeps the US dollar index high, leading to a decline in copper prices [SMM Copper Morning Comment]

Last Friday evening, LME copper opened at $9,715.5/mt, initially reaching a high of $9,726.5/mt before declining to a low of $9,651/mt during the session. It then consolidated at the end of the trading session and finally closed at $9,680/mt, with a decline of 2.06%. Trading volume reached 18,000 lots, and open interest was 321,000 lots. Last Friday evening, the most-traded SHFE copper 2407 contract opened at ¥78,640/mt, initially declining to a low of ¥78,480/mt. It then slightly rebounded during the session, reaching a high of ¥78,970/mt near the end of the trading session, and finally closed at ¥78,700/mt, with a decline of 1.27%. Trading volume reached 21,000 lots, and open interest was 129,000 lots.

On the macroeconomic front, the US June Markit PMI data released last Friday was better than expected across the board, with service sector activity reaching its fastest pace in over two years, indicating that overall business activity remains resilient. The US dollar index rose, negatively impacting copper prices.

On the fundamentals side, due to the rebound in copper prices, downstream demand weakened again, forcing sellers to sell at low prices, but downstream buyers mainly restocked based on immediate needs. Additionally, a concentration of imported copper is expected to arrive at the port by the end of the month, which is anticipated to have some impact on the spot market. Overall, the weak demand is unlikely to change in the short term, and spot supply remains ample. In terms of prices, US Fed officials are expected to speak throughout the week, which is likely to put some pressure on copper prices.