Domestic favorable policies support copper prices; current ample supply puts pressure on premiums [SMM Copper Morning Comment]

Last Friday, LME copper opened at $9,590/mt, surged to $9,656/mt in early trading, then declined to $9,591.5/mt during the session, and slightly rebounded at the close, finally settling at $9,622.5/mt, up 1.22%. Trading volume reached 17,000 lots, and open interest was 277,000 lots. Last Friday, the most-traded SHFE copper 2412 contract opened at 77,240 yuan/mt, peaked at 77,300 yuan/mt in early trading, then fluctuated downward, hitting a low of 76,830 yuan/mt at the close, and slightly rebounded, finally settling at 77,040 yuan/mt, up 0.54%. Trading volume reached 24,000 lots, and open interest was 150,000 lots. Macro side, NBS data showed that Q3 GDP grew by 4.6%, with significant improvements in several economic indicators in September. On the domestic policy front, the 500 billion yuan swap facility operation details were released. Additionally, the central bank officially launched stock repurchase and refinancing operations, and stated it would further lower the reserve requirement ratio (RRR) by 0.25-0.5 percentage points when appropriate. The LPR is expected to be lowered by 0.2-0.25 percentage points on the 21st. Following the policy announcements, the market expects more domestic policies to stimulate consumption, supporting copper prices. Fundamentally, supply side, a large release of warehouse warrants after delivery and continuous inflow of imported copper have resulted in ample market supply. However, current high copper prices are putting pressure on overall consumption. In summary, with escalating geopolitical tensions and the expected LPR cut today, copper prices are expected to have some support.