ADP employment data showed a surprise drop, marking the largest decline in over two years. LME copper broke through the 10,000 yuan mark, with SHFE copper following suit [SMM Morning Comment on Copper]

SMM News on July 3: Overnight, LME copper opened and touched a low of $9,948/mt, then fluctuated upward all the way, touching a high of $10,020.5/mt near the end of the session. It pulled back slightly at the end of the session and finally closed at $10,010/mt, up 0.67%. Trading volume reached 17,000 lots, and open interest reached 285,000 lots. Overnight, the most-traded SHFE copper 2508 contract opened and touched a low of 80,560 yuan/mt. It fluctuated considerably in the early session and touched a high of 80,990 yuan/mt. After pulling back slightly in the session, it continued to rebound to a high level and finally closed at 80,900 yuan/mt, up 0.35%. Trading volume reached 36,000 lots, and open interest reached 225,000 lots. On the macro side, the US ADP employment figure recorded a decrease of 33,000, lower than the expected 95,000, marking the largest decline since March 2023. The sluggish labour market has still not shown improvement, and traders have increased their bets on at least two interest rate cuts by the US Fed before the end of this year, which is bullish for copper prices. In addition, the trade agreement reached between the US and Vietnam has reduced the tariffs previously planned to be imposed on Vietnamese export products, alleviating market concerns about trade tensions. On the fundamental side, from the supply side, suppliers had a strong willingness to sell during the day, and there were behaviors of driving down prices and purchasing at low prices in the market. However, the overall supply in Changzhou was tight, forming a regional supply shortage pattern. From the demand side, copper prices were in a high range, which suppressed downstream demand. Copper rod factories in Jiangsu and Zhejiang were negative about purchasing due to maintenance. Although transactions in Changzhou were relatively good due to tight supply, the overall downstream purchasing sentiment was low. On the price side, with the increasing downward pressure on the US economy and the continuous expansion of the US debt scale, the US dollar index was weak. It is expected that copper prices will still have some upside room today.