US dollar weakens ahead of US-Japan talks, copper prices gain momentum and continue to hold up well [SMM Morning Comment on Copper]

SMM, May 21: Overnight, LME copper opened at $9,510.5/mt. It initially fluctuated downward, touching a low of $9,490/mt, before maintaining considerable fluctuations and fluctuating upward. Near the close, it reached a high of $9,572/mt and eventually closed at $9,554.5/mt, up 0.4%. Trading volume reached 13,000 lots, and open interest reached 290,000 lots. Overnight, the most-traded SHFE copper 2506 contract opened at 77,880 yuan/mt. It immediately touched a low of 77,720 yuan/mt at the beginning of the session, then fluctuated upward and reached a high of 78,160 yuan/mt during the session. After a slight pullback near the close, it continued to rise to a high and eventually closed at 78,140 yuan/mt, up 0.36%. Trading volume reached 26,000 lots, and open interest reached 165,000 lots. On the macro side, US Fed officials made more cautious remarks about the economy and doubled down on their concerns about the economic impact of the Trump administration's trade policies. Meanwhile, traders are looking forward to the upcoming talks between the US and Japan, which may include discussions on exchange rates as part of a trade agreement. The US dollar weakened again on Tuesday, which is bullish for copper prices. On the fundamental side, supply side, there is a shortage of mainstream supply, and suppliers are reluctant to sell at low prices due to tight supply. Demand side, after the copper price fell in the morning session, downstream buyers began purchasing due to the low prices, and both the market's purchasing sentiment index and sales sentiment index improved during the day. Factors such as inventory buildup and the expected significant outflow of warrants today are expected to suppress spot premiums. However, the current market has some support for spot premiums due to the shortage of mainstream supply. On the price side, it is expected that there will be certain support for copper prices below today's levels.