PBoC Introduced "Policy Package", Copper Prices Reached Two-Month High Overnight [SMM Copper Morning Comment]

Overnight, LME copper opened at $9,749.5/mt, initially dipping to $9,724/mt, then climbing steadily to a high of $9,825/mt near the close, finally settling at $9,821/mt, up 2.92%. Trading volume reached 35,000 lots, and open interest was 280,000 lots. Overnight, the most-traded SHFE copper contract 2410 opened at and hit a low of 77,060 yuan/mt, then rose to a high of 77,500 yuan/mt during the session, and consolidated at the end to close at 77,360 yuan/mt, up 1.36%. Trading volume reached 21,000 lots, and open interest was 95,000 lots. Macro side, yesterday the PBoC introduced a "policy package," announcing rate cuts, RRR cuts, reductions in existing mortgage rates, and lowering the minimum down payment for second homes. It is expected to further cut the RRR by 0.25%-0.5% within the year. For the first time, a monetary policy tool was created to support the stock market. The stimulus policy boosted market confidence in the outlook for international oil demand, leading to a rebound in international oil prices, with copper prices following suit. Additionally, Fed Governor Bowman stated that a cautious approach to further rate cuts would continue, and the possibility of stagnation in anti-inflation progress could not be ruled out. Concerns about the health of the labour market intensified among consumers, with the US consumer confidence index dropping significantly by 6.9 to 98.7, below expectations and marking the largest decline in three years, putting pressure on the US dollar index and benefiting copper prices. Fundamentally, the import volume of copper cathode decreased compared to previous levels, leading to tight spot copper supply. Traders held firm on prices, with spot premiums/discounts rising continuously and expected to remain strong. Meanwhile, as copper prices rose yesterday, downstream buyers actively sought sources, resulting in a hot spot market. Price-wise, copper prices are expected to continue to fluctuate upward today.