Year-End RRR Cuts Possible by Central Bank; Copper Prices Edged Up Overnight [SMM Morning Comment on Copper]

SMM, December 26: LME copper was closed overnight. The most-traded SHFE copper 2502 contract opened at 74,180 yuan/mt overnight, initially hitting a high of 74,210 yuan/mt before fluctuating downward to an intraday low of 74,070 yuan/mt. It then fluctuated upward and consolidated sideways at the end of the session, finally closing at 74,160 yuan/mt, up 0.14%. Trading volume reached 6,000 lots, and open interest stood at 139,000 lots. Macro side, the PBOC conducted 192.3 billion yuan of 7-day reverse repo operations. Macro analyst Qing Wang stated that although the peak of local bond issuance has passed, the PBOC may implement an RRR cut of 0.25 to 0.5 percentage points by the end of the year to support banks in increasing credit issuance, continue backing government bond issuance, and sustain signals of stabilizing growth. Meanwhile, policy signals from the recent domestic fiscal work conference have boosted market sentiment, halting the decline in copper prices. However, the US dollar index remained at high levels, which will exert some pressure on copper prices, leaving them lacking further upward momentum. Fundamentals side, supply side, the circulation of domestically produced copper cathode was limited, with most transactions during the day involving imported cargoes. Demand side, downstream purchasing sentiment was moderate, with overall purchasing as needed. As trading transitioned to cargoes with invoices dated next month, the market is expected to become even quieter. Copper prices are expected to fluctuate rangebound at current levels today.