Weak US retail data & inventory inflection point suppress LME copper and SHFE copper; after slight gains, the downward pressure on copper premiums becomes prominent [SMM Copper Morning Comment]

Published: May 16, 2025 08:54

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[Weak US retail data & inventory inflection point suppress copper prices; backwardation faces downward pressure after slight rise in LME copper and SHFE copper] On the macro side, the growth rate of US retail sales slowed down in April and the monthly PPI rate unexpectedly declined, leading to a drop in the US dollar index and pushing up copper prices. Meanwhile, Putin's absence from the Turkey talks postponed the Russia-Ukraine talks to the 16th. Domestically, Li Qiang stated that strengthening the domestic economic cycle is a strategic move to promote steady and long-term economic growth.

SMM May 16 News: Overnight, LME copper opened at $9,527.5/mt. Prices fluctuated at the start of the session, dipping to a low of $9,511.0/mt during the session, before fluctuating upward. Prices approached a high of $9,606.0/mt near the close and ultimately closed at $9,600.0/mt, up 0.08%. Trading volume was 13,902 lots, and open interest was 293,706 lots. Overnight, the SHFE 2506 copper contract opened at 78,160 yuan/mt. Prices fluctuated at the start of the session, dipping to a low of 78,010 yuan/mt during the session, before gradually rising to a high of 78,610 yuan/mt. It ultimately closed at 78,490 yuan/mt, up 0.13%. Trading volume was 27,647 lots, and open interest was 184,563 lots. On the macro front, the growth rate of US retail sales in April slowed down, and the monthly PPI rate unexpectedly declined, causing the US dollar index to fall and pushing up copper prices. Meanwhile, Putin's absence from the Turkey talks led to the postponement of the Russia-Ukraine talks to the 16th. Domestically, Li Qiang stated that strengthening the domestic economic cycle is a strategic move to promote steady and long-term economic growth. On the fundamental front, yesterday, transactions for standard-quality copper under the SHFE 2506 copper contract moved downwards after a higher opening, falling to a premium of 380-410 yuan/mt. SHFE copper futures warrants increased by over 20,000 mt to over 50,000 mt. As of Thursday, May 15, SMM copper inventories in major regions across China increased by 8,900 mt from Monday to 132,000 mt, up 11,900 mt from last Thursday, ending a 10-week consecutive weekly destocking trend. The large price spread between futures contracts reduced downstream purchasing interest, and suppliers' active transfer to delivery warehouses was the main reason. It is expected that spot premiums will continue to decline today compared to yesterday. Overall, with the US dollar index weakening again and today being a contract rollover day, it is expected that copper prices will have some support at the bottom and will fluctuate at highs.

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