The downward shift in the center of copper prices indicates weakness, constrained by both sanctions expectations and weak supply and demand [SMM BC Copper Commentary]

Today, the most-traded BC copper 2508 contract opened at 69,090 yuan/mt, closing the day with a negative candlestick, indicating an increase in bearish open interest. During the night session, the most-traded BC copper contract fluctuated upward initially, touching an intraday high of 69,330 yuan/mt, before fluctuating rangebound and downward. During the day session, copper prices rose slightly after the opening, but gradually moved lower towards the end of the session, reaching an intraday low of 68,920 yuan/mt. It finally closed at 69,250 yuan/mt, down 0.33%, with open interest reaching 4,501 lots, an increase of 191 lots from the previous trading day, and trading volume reaching 3,852 lots. On the macro front, Trump stated that if Russia fails to reach an agreement on the Russia-Ukraine conflict within 50 days, a 100% secondary tariff will be imposed on Russia, and secondary sanctions will be imposed on countries purchasing Russian oil. This has triggered adjustments in global crude oil supply expectations. As crude oil serves as a "barometer" for commodities, it has lowered market expectations for global economic recovery, disrupted market sentiment, and exerted downward pressure on copper prices. On the fundamental side, the recent increase in inventory on the supply side is mainly due to the impact of the approaching delivery and contract rollover, with a large amount of cargo being used for delivery and no significant increase in actual spot cargo circulation. On the demand side, it is constrained by the off-season, with downstream enterprises' purchase willingness remaining weak and the momentum for restocking based on immediate needs being insufficient. Given the weak supply and demand, copper prices lack support below.

The SHFE copper 2508 contract closed at 78,090 yuan/mt. If based on the most-traded BC copper 2508 contract price of 69,250 yuan/mt, its after-tax price is 78,253 yuan/mt. The price spread between the SHFE copper 2508 contract and the BC copper contract is -163, maintaining an inverted spread and narrowing compared to the previous day.