US Dollar Stabilization and End-User Pressure Lead to Overnight Decline in Copper Prices [SMM Copper Morning Comment]

SMM March 21st: LME copper opened at $9,934 last night, reaching a high of $9,986.5 during the session before fluctuating downward to hit a low of $9,906 and finally closing at $9,910. It fell $87.5 from the previous close of $9,997.5, a decline of 0.87%. SHFE copper 2505 contract opened at 81,310, reached a high of 81,420, and touched a low of 81,020. The latest price was 81,310, down 40 from the previous close of 81,670, a decrease of about 0.49%. Trading volume was 44,832, with open interest at 243,630. Overall, prices showed significant volatility after the opening, initially falling to a low point, followed by a fluctuating trend. On the macro side, the US Fed will start to slow the pace of balance sheet reduction on April 1. In his press conference, Fed Chairman Powell released several policy signals. He stated that while the US economy is strong, there are uncertainties, and the risk of an economic recession "has risen but is not yet high." The Fed is in a position to cut interest rates or maintain its current policy stance, but it will not rush to cut rates. Trump also urged the Fed to cut interest rates, and market concerns over a US economic recession eased, leading the US dollar index to rise again, putting pressure on copper prices. Fundamentally, as copper prices continued to rise, end-use consumption was suppressed, and destocking slowed. Meanwhile, in South China, due to reduced supply, consumption remained moderate, and inventories continued to decline, with premiums remaining high. Some suppliers may take the opportunity to ship east China's inventory to South China. As of Thursday, March 20, SMM national mainstream region copper inventories decreased by 2,600 mt to 346,400 mt compared to Monday, and were down 9,100 mt from the previous Thursday, achieving three consecutive weeks of weekly destocking. Currently, they have pulled back 30,600 mt from the year's high and are 48,600 mt lower YoY. In summary, with the US dollar index stabilizing and physical buying restrained by high copper prices, the upside for copper prices today may be limited.