Macro sentiment is bullish; copper prices fluctuate at highs [SMM Copper Morning Comment]

Last Friday evening, LME copper opened at $9,745.5/mt, initially declined to $9,716.5/mt, then fluctuated upward, reaching a high of $9,817/mt near the close, and finally settled at $9,803/mt, up 0.67%. Trading volume reached 16,000 lots, and open interest was 292,000 lots. Last Friday evening, the most-traded SHFE copper 2411contract opened at 77,370 yuan/mt, initially dipped to 77,340 yuan/mt, then rose, reaching a high of 78,050 yuan/mt near the close, and finally settled at 78,020 yuan/mt, up 0.96%. Trading volume reached 33,000 lots, and open interest was 161,000 lots. Macro side, the US September PPI year-on-year rate was 1.8%, higher than the market expectation of 1.6%. The PPI data indicates a favorable inflation outlook, supporting the US Fed's expected interest rate cut next month, which is bullish for copper prices. Meanwhile, China's Ministry of Finance announced plans to introduce a series of targeted incremental policies soon to stabilize growth, expand domestic demand, and mitigate risks, which is expected to boost copper prices. Fundamentally, due to traders' pessimistic attitude towards future premiums, there is a noticeable sentiment to offload, leading to an increase in copper cathode spot supply. However, from the consumption side, copper prices remain high, with downstream sectors showing significant wait-and-see sentiment, resulting in mediocre overall transactions and some pressure on spot premiums/discounts. Additionally, according to SMM survey data, there will be a significant increase in imported copper inflows in mid-to-late October. Under this expectation, if copper prices continue to fluctuate at highs, the oversupply in the spot market will further persist. Price-wise, attention should be paid to the suppression of demand by high prices. Copper prices are expected to continue fluctuating at highs today, with limited upward potential.