Copper prices fluctuated overnight and closed higher, but the increase in inventory limited the upside potential [SMM Morning Comment on Copper]

SMM, June 4: Overnight, LME copper opened at $9,566.5/mt, dipping to a low of $9,557.5/mt shortly after the opening bell. It then fluctuated upward, reaching a high of $9,648/mt during the session, before ending the day with a narrow rangebound fluctuation, closing at $9,638.5/mt, up 0.24%. Trading volume reached 16,000 lots, and open interest stood at 287,000 lots. Overnight, the most-traded SHFE copper 2507 contract opened at and dipped to a low of 77,910 yuan/mt, before surging straight up to a high of 78,400 yuan/mt shortly after the opening bell. It then maintained a narrow rangebound fluctuation, closing at 78,180 yuan/mt, up 0.5%. Trading volume reached 52,000 lots, and open interest stood at 187,000 lots. On the macro front, US data released on Tuesday showed that job openings increased in April, but layoffs also rose. Amid growing tariff concerns, the labour market is cooling. Starting Wednesday, the US will double tariffs on imported steel and aluminum to 50%, with Trump hoping countries will submit their best offers in trade negotiations. Overall, the US dollar remains under pressure, which is bullish for copper prices. On the fundamental side, from the supply side, although the supply in the Shanghai region decreased slightly today, there is still more inventory to be added subsequently, and imported supply is expected to arrive tomorrow. There were significant differences in copper cathode prices among various brands during the day, with premiums for different brands fluctuating widely. From the demand side, downstream consumption was sluggish on the first day after the holiday, with purchasing sentiment declining. As prices fell, downstream buyers became more hesitant. As of Monday, June 3, SMM's copper inventories in major regions across China increased by 14,300 mt MoM from before the holiday to 153,000 mt, up 32,900 mt from the previous low. Compared to the inventory changes from last Thursday, inventories in most regions across the country increased, with only a slight decrease in the Shanghai region. On the price front, it is expected that there will be limited upside potential for copper prices today.