US Dollar Index Continues to Rise, Gains in the Most-Traded BC Copper Contract Are Limited [SMM BC Copper Commentary]

Today, the most-traded BC copper 2502 futures contract opened at 66,890 yuan/mt and closed with a bullish candlestick, with the lower shadow piercing through the 5-day and 60-day moving averages. On Friday night, the most-traded BC copper contract weakened after opening, hitting bottom at 66,490 yuan/mt as bears increased their open interest. Subsequently, bears closed their positions, leading to a rebound in the futures market. During Monday's morning trading session, as bears reduced their open interest, the center of the futures market rose, peaking at 67,110 yuan/mt. In the afternoon trading session, after a narrow adjustment, the BC copper 2502 contract broke through the 67,000 yuan/mt threshold again as bears exited the market near the close, ultimately settling at 67,050 yuan/mt, up 250 yuan/mt or 0.37%. The increase was mainly driven by a reduction in bearish open interest, with open interest decreasing to 5,231 lots, down 345 lots from the previous trading day. Trading volume reached 7,115 lots, an increase of 477 lots compared to the previous trading day.

Macro side, the overall sentiment in the futures market was relatively positive today, and copper prices ended higher. However, the US December non-farm payrolls released on Friday night recorded 256,000, exceeding the previous value of 212,000 and the forecast of 160,000. The unemployment rate came in at 4.1%, lower than both the previous value and the forecast of 4.2%. The strong performance of the labor market reinforced expectations that the US Fed will pause interest rate cuts, pushing the US dollar index higher and limiting the gains in copper prices.

The SHFE copper 2502 contract settled at 75,550 yuan/mt. Based on the BC copper 2502 contract price of 67,050 yuan/mt, its post-tax price is approximately 75,767 yuan/mt. The price spread between the SHFE copper 2502 contract and the BC copper 2502 contract stood at -217 yuan/mt, with the spread remaining inverted and narrowing compared to the previous trading day.