US July PPI Supports Rate Cut Expectations, BHP Copper Mine Begins Strike [SMM Copper Morning Comment]

Publicado: Aug 14, 2024 09:33

Fonte: SMM

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SMM August 14: Overnight, LME copper opened at $8,957/mt, initially maintained slight fluctuations, then plunged to a session low of $8,895/mt, before climbing to a session high of $8,984/mt.

SMM August 14: Overnight, LME copper opened at $8,957/mt, initially maintained slight fluctuations, then plunged to a session low of $8,895/mt, before climbing to a session high of $8,984/mt. It then fluctuated widely and finally closed at $8,978.5/mt, down 0.55%, with a trading volume of 18,000 lots and an open interest of 281,000 lots. Overnight, the most-traded SHFE copper 2409 contract opened at 72,200 yuan/mt, initially fell to a session low of 71,650 yuan/mt, then climbed to a session high of 72,410 yuan/mt, and finally closed at 72,310 yuan/mt, down 0.32%, with a trading volume of 47,000 lots and an open interest of 164,000 lots.

Macro side, the US July PPI dropped significantly from the previous value, increasing traders' bets on the US Fed relaxing policies, boosting confidence in a rate cut in September. LME inventories surged on Tuesday to the highest level in nearly five years, while concerns about domestic demand persisted, causing copper prices to fall again.

Fundamentals, supply side, approaching delivery, smelter shipments increased, and warrants continued to flow out. Demand side, copper prices rose again, leading to a slight cooling in consumption. Overall, the US Fed's rate cut expectations provided a boost, and copper prices are expected to remain strong and volatile before the release of the US July CPI. It is also worthy of attention that workers at BHP's Chilean copper mine began a strike on Tuesday morning after wage negotiations failed, which may impact the mine's production.

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Declaração sobre a Fonte de Dados: Com exceção das informações publicamente disponíveis, todos os demais dados são processados pela SMM com base em informações publicamente disponíveis, comunicação de mercado e com base no modelo de base de dados interna da SMM. São apenas para referência e não constituem recomendações para a tomada de decisão.

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East China inventory divergence is evident; SHFE copper spot premiums may consolidate at lows [SMM Shanghai spot copper]

[SMM SHFE Copper Spot] Looking ahead to tomorrow, SMM recorded social inventory in Shanghai at 55,500 mt, down 11,000 mt WoW from Monday this week; social inventory in Jiangsu stood at 23,200 mt, up 3,200 mt WoW, with inventory trends in the two east China regions clearly diverging. The rapid destocking in Shanghai was driven on one hand by the pullback in copper prices and spot premiums in the previous trading session, which released some dip-buying from downstream buyers and led to solid spot warehouse withdrawals; on the other hand, arrivals remained relatively limited recently, further pushing Shanghai inventory lower. Jiangsu, by contrast, saw inventory buildup due to concentrated arrivals from some smelters. On the demand side, buying picked up after yesterday's copper price pullback, but intraday consumption enthusiasm has already cooled, with downstream buyers returning to just-in-time procurement and remaining limited in their acceptance of current premiums. Meanwhile, the backwardation spread between the front and next month contracts remains at a relatively high level, and suppliers' rollover and shipment pace will remain a key variable affecting spot premiums. Overall, low inventory and limited arrivals in Shanghai provide some support to spot prices, but insufficient demand sustainability still caps premium upside. Spot prices against the SHFE copper 2609 contract are expected to remain rangebound tomorrow, with the center possibly edging slightly lower, though room for a further sharp decline is relatively limited. Going forward, the key focus will be on changes in the backwardation structure between the front and next month contracts.

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