Boosted by the US-UK trade agreement, copper prices fluctuate upwards but with limited upside potential [[SMM Morning Comment on Copper]]

SMM News on May 9: Overnight, LME copper opened at $9,381/mt, dipping to a low of $9,358/mt shortly after the opening bell. It then fluctuated upward throughout the session, reaching a high of $9,475/mt near the close, and eventually settled at $9,474.5/mt, up 0.73%. Trading volume reached 18,000 lots, and open interest stood at 291,000 lots. Overnight, the most-traded SHFE copper 2506 contract opened at and dipped to a low of 77,540 yuan/mt. It fluctuated rangebound in the early session before rising throughout the day, reaching a high of 78,170 yuan/mt near the close, and eventually settled at 78,140 yuan/mt, up 0.72%. Trading volume reached 42,000 lots, and open interest stood at 182,000 lots. On the macro front, Trump announced a trade deal with the UK, raising hopes for similar agreements with other countries. Meanwhile, in the week ending May 3, the number of Americans filing for unemployment benefits for the first time fell by 13,000 to 228,000. After the central bank kept interest rates unchanged on Wednesday, Powell said that although tariffs could lead to higher unemployment and inflation, the labour market remained robust, and copper prices maintained a slight upward trend. On the fundamental side, supply-wise, as the delivery date approached, spot arbitrageurs actively sold their positions due to the widening price spread between futures contracts. However, with inventories in the Shanghai area continuing to decline, overall supply remained tight, providing some support for spot premiums. Demand-wise, although there was some buying sentiment in the morning session, it was mainly driven by just-in-time procurement from some downstream players. Overall market activity was moderate, with no large-scale buying observed. As of May 8, inventories in the Shanghai area decreased by 3,200 mt from Tuesday to 86,400 mt. The continuous decline in inventories provided support for spot premiums. However, factors such as the widening price spread between futures contracts and the approaching delivery date are expected to curb spot premiums, which may continue to fall tomorrow. In terms of prices, it is expected that there will be limited upside potential for copper prices today.