US dollar index fluctuations coupled with approaching delivery, upward pressure on copper prices remains [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,619.5/mt, fluctuated upward in early trading, touched an intraday high of $9,664.0/mt before pulling back, and hit a low of $9,575.5/mt towards the end of the session. It eventually closed at $9,592.0/mt, down 0.34%, with a trading volume of 17,304 lots and an open interest of 291,016 lots. Overnight, the SHFE copper 2506 contract opened at 78,900 yuan/mt, rose rapidly in early trading to touch an intraday high of 79,090 yuan/mt, then fluctuated downward, hitting a low of 78,480 yuan/mt before rebounding somewhat. It eventually closed at 78,650 yuan/mt, up 0.19%, with a trading volume of 37,544 lots and an open interest of 190,552 lots.

[SMM Copper Morning Meeting Summary] News: (1) As market news indicated that the US was "close to reaching" trade tariff agreements with Japan, South Korea, and India, and that the US would not seek a weaker US dollar in tariff negotiations, the US dollar index rebounded after falling close to the 100 mark, eventually closing up 0.11%. (2) Central Bank: From January to April, social financing increased by 16.34 trillion yuan, new loans increased by 10.06 trillion yuan, and M2 increased by 8% YoY in April.

Spot: (1) Shanghai: On May 14, SMM #1 copper cathode spot was quoted at a discount of 50 yuan/mt to parity against the front-month 2505 contract, with an average price at a discount of 25 yuan/mt, down 15 yuan/mt from the previous trading day. Today is the last trading day for the SHFE copper 2505 contract. Given the current spot discount of around 50 yuan/mt and a calendar spread of BACK 400 yuan/mt between months, spot traders are expected to quote a premium of over 350 yuan/mt against the SHFE copper 2506 contract. With copper prices remaining high, downstream procurement sentiment has decreased somewhat, and it is expected that spot quotes against the SHFE copper 2506 contract will move downwards after a higher opening.

(2) Guangdong: On May 14, Guangdong #1 copper cathode spot was quoted at a discount of 80 yuan/mt to a premium of 50 yuan/mt against the front-month contract, with an average price at a discount of 15 yuan/mt, down 60 yuan/mt from the previous trading day. Overall, the calendar spread before delivery has not narrowed, and downstream buyers are reluctant to purchase as premiums decline, resulting in generally sluggish trading activity.

(3) Imported Copper: On May 14, warrant prices ranged from $95 to $105/mt, with a QP of June, and the average price fell by $1/mt from the previous trading day. B/L prices ranged from $108 to $122/mt, with a QP of June, and the average price fell by $2/mt from the previous trading day. EQ copper (CIF B/L) prices ranged from $76 to $88/mt, with a QP of June, and the average price rose by $4/mt from the previous trading day. Quotes are based on cargo arrivals expected in mid-to-late May. The price ratio performed poorly in the morning session yesterday, with losses of $600/mt for imports against the SHFE copper 2406 contract. Both warrant and B/L offers declined, as the expected port arrivals are set to increase in late May (mainly LME cancelled B/Ls), leading to a decline in registered copper offers. It was heard that among traders, domestic pyrometallurgy B/Ls were offered at $110 in late May, with a QP in June; general pyrometallurgy B/Ls closed at around $115-120, with a QP in June; domestic warrants closed at around $100-105, with a QP in June; EQ B/Ls were offered at $90, with a QP in June. Overall, in the short term, the premium for registered copper declined due to the deterioration of the SHFE/LME price ratio, while EQ copper remained firm.

(4) Secondary copper: On May 14, the price of secondary copper raw materials rose by 300 yuan/mt MoM. The price of bare bright copper in Guangdong was 72,500-72,700 yuan/mt, up 300 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,681 yuan/mt, up 416 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,315 yuan/mt. According to the SMM survey, after the midday session, due to the rapid rise in copper prices, secondary copper rod enterprises indicated that suppliers did not choose to sell at higher prices but instead reduced shipments. This reduction in shipments by suppliers, to a certain extent, reflects a bullish outlook on future copper prices. Amid the temporary easing of Sino-US trade relations, export orders for copper semis processing enterprises have only temporarily rebounded to the level before the tariff hikes, with no additional new orders. There has been no over-expectation in copper consumption for the time being.

(5) Inventory: On May 14, LME copper cathode inventories decreased by 4,075 mt to 185,575 mt. On the same day, SHFE warrant inventories increased by 20,912 mt to 50,069 mt.

Price: On the macro side, the US dollar index fell yesterday amid concerns about the economy. Later, according to market news, the US trade tariff agreements with Japan, South Korea, and India were "close to being finalized," and the US would not seek a weaker dollar in tariff negotiations. After the US dollar index fell close to the 100 mark, it rebounded, forming a V-shaped trend, causing copper prices to rise first and then fall overnight. On the fundamental side, as the last trading day of the 2505 contract approached, downstream purchasing intentions were low amid high copper prices and a widening price spread between futures contracts. It is expected that spot prices against the SHFE copper 2506 contract will move downwards after a higher opening. Overall, with the fluctuations in the US dollar index and the approaching delivery, it is expected that there will be certain upward pressure on copper prices today.

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