US CPI data unexpectedly falls below expectations, bullish for copper prices [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,564.0/mt. Prices fluctuated at the start of the session, dipping to a low of $9,510.0/mt before steadily climbing higher. Towards the end of the session, prices reached a peak of $9,624.5/mt and eventually closed at $9,624.5/mt, up 1.29%. Trading volume was 16,908 lots, and open interest stood at 289,770 lots. Overnight, the SHFE copper 2506 contract opened at 77,930 yuan/mt. Prices fluctuated at the start of the session before gradually climbing higher. They dipped to a low of 77,830 yuan/mt at the start of the session and then continued to rise. Towards the end of the session, prices reached a peak of 78,730 yuan/mt and eventually closed at 78,650 yuan/mt, up 0.99%. Trading volume was 46,139 lots, and open interest stood at 187,763 lots.

[SMM Copper Morning Meeting Summary] News: (1) The US April unadjusted CPI year-on-year rate unexpectedly fell to 2.3%, the lowest since February 2021. (2) Trump's remarks - After the CPI report, he again pressured Powell, calling for an interest rate cut, stating that the stock market would surge, advocating measures to restore normal relations with Syria, ending sanctions on Syria, securing a $600 billion investment commitment from Saudi Arabia, and threatening to reduce Iran's oil exports to zero if no agreement is reached.

Spot: (1) Shanghai: On May 13, SMM #1 copper cathode spot prices against the front-month 2505 contract were quoted at a discount of 40 yuan/mt to a premium of 20 yuan/mt, with an average price of a discount of 10 yuan/mt, up 5 yuan/mt from the previous trading day. As the delivery countdown begins, warrant inventory increased slightly the day before, but traders' purchasing sentiment has risen, and warrant inventory is expected to gradually increase. Spot discounts are likely to remain firm today.

(2) Guangdong: On May 13, Guangdong #1 copper cathode spot prices against the front-month contract were quoted at a discount of 30 yuan/mt to a premium of 120 yuan/mt, with an average premium of 45 yuan/mt, down 40 yuan/mt from the previous trading day. Overall, despite declining inventory, premiums have continued to fall, primarily due to a large price spread between futures contracts. This situation is expected to improve after delivery.

(3) Imported copper: On May 13, warrant prices ranged from $96 to $106/mt, with a prompt month (QP) of May, and the average price remained unchanged from the previous trading day. B/L prices ranged from $108 to $126/mt, with a QP of May, and the average price remained unchanged from the previous trading day. EQ copper (CIF B/L) prices ranged from $72 to $84/mt, with a QP of May, and the average price remained unchanged from the previous trading day. Quotations were based on cargoes expected to arrive in mid-to-late May. Yesterday's market transactions improved compared to the previous day, with market participants' views on future premium trends diverging. Due to the narrowing LC price spread and the contraction of the LME backwardation structure, some suppliers actively sold their positions after taking profits. However, the tight balance in Asia and the shortage of EQ copper have kept the transaction center from declining, with Yangshan copper premiums currently at a high and stagnant level. It was heard that among traders, domestic pyrometallurgy B/Ls for late May were quoted at $110, with a QP of June; general pyrometallurgy transactions were around $120, with a QP of June; domestic warrant transactions were around $100, with a QP of June; EQ B/L transactions were heard at $90, with a QP of June; and EQ B/Ls for early June arrivals were quoted at $95, with a QP of June. According to SMM, there have been rumors of production cuts at a smelter in Asia recently. Attention should be paid to the circulation of major brands in the future market.

(4) Secondary copper: On May 13, the price of secondary copper raw materials remained unchanged MoM. The price of bare bright copper in Guangdong was 72,200-72,400 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,265 yuan/mt, down 174 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,080 yuan/mt. According to an SMM survey, secondary copper raw material traders indicated yesterday that copper prices had dropped slightly, affecting upstream shipping sentiment. Although downstream demand is currently weakening and the supply of secondary copper raw materials is relatively ample, in the medium term, the issue of tight supply of secondary copper raw materials still cannot be effectively resolved.

(5) Inventory: On May 13, LME copper cathode inventory decreased by 1,000 mt to 189,650 mt. On the same day, SHFE warrant inventory increased by 9,073 mt to 29,157 mt.

Price: On the macro front, the US April unadjusted CPI year-on-year rate unexpectedly fell to 2.3%, the lowest since February 2021. After the CPI report, Trump once again pressured Powell, calling for an interest rate cut and stating that the stock market would surge. US inflation data unexpectedly fell below expectations, causing the US dollar index to weaken and pushing up copper prices. On the fundamental front, arrivals remain low, and with the delivery countdown underway, warrant inventory growth is also limited. However, the improved purchasing sentiment among traders may gradually increase warrant volumes. Spot discounts are expected to remain firm. Overall, the below-expectation inflation data caused the US dollar index to give up gains and subsequently oscillate. It is expected that the bottom support for copper prices will weaken today.

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[The above information is based on market collection and comprehensive assessment by the SMM research team. The information provided herein is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]