International Oil Prices Rebound, Copper Prices Follow Upward [SMM Copper Morning Comment]

Last night, LME copper opened at $9,120/mt. It initially peaked at $9,124.5/mt, then fluctuated downwards to a low of $9,051.5/mt. Towards the end of trading, it rose again, finally closing at $9,096.5/mt, up 1.59%. The trading volume was 16,000 lots and open interest was 279,000 lots. The most-traded SHFE copper 2410 contract opened and peaked at 72,860 yuan/mt. It initially dropped to a low of 72,460 yuan/mt, then fluctuated rangebound before rising near the close to a high of 72,960 yuan/mt, closing ultimately at 72,900 yuan/mt, up 1.08%. The trading volume was 39,000 lots and open interest was 157,000 lots. Macro front, international oil prices rebounded as the market worried that Hurricane, expected to strike Louisiana on Wednesday, might damage the oil production and refining facilities along the US Gulf Coast, driving up copper prices as well. Additionally, it was reported that the US Fed plans to halve the capital requirement increase for large banks from an earlier 19% to 9%. The market eagerly awaits the release of the CPI data on Wednesday night, which might be a crucial indicator affecting the extent of the Fed's rate cuts. Fundamentally, on the supply side, it was noted that a significant amount of imported copper arrived at ports last weekend, with nearly half being hydro or non-registered sources. On the consumption side, with the decline in copper prices, downstream procurement increased, also driven by the upcoming Mid-Autumn Festival holiday, resulting in good consumption performance and significant destocking. According to an SMM survey, as of Monday, September 9, SMM copper stocks in major regions across China decreased by 24,000 mt WoW to 231,000 mt, continuing the destocking trend with an accelerating speed. However, the total stocks were still 136,000 mt higher YoY from last year's 95,000 mt. On the price side, supported by expectations of a Fed rate cut, copper prices are projected to have some upward potential.