BC copper prices fluctuated and closed higher, with the price spread between SHFE copper and BC copper narrowing [SMM BC Copper Commentary]

Today, the most-traded BC copper 2509 contract opened at 69,530 yuan/mt and closed with a positive daily candle. During the night session, the most-traded BC copper 2509 contract fluctuated considerably, initially dipping to 69,490 yuan/mt. During the day session, the center of copper prices gradually moved up, touching an intraday high of 69,790 yuan/mt, and ultimately closed at 69,750 yuan/mt, marking a 0.55% increase. Open interest reached 4,727 lots, a decrease of 29 lots from the previous trading day, with trading volume at 2,744 lots. On the macro front, US Fed's Daly stated that the timing for an interest rate cut is approaching and that there is a higher likelihood of more than two interest rate cuts this year. Goldman Sachs predicts that the US Fed will implement three consecutive 25-basis-point interest rate cuts starting from September and points out that if unemployment rises, there could be a 50-basis-point interest rate cut. The strengthening expectations for US Fed interest rate cuts have provided a boost to copper prices. On the fundamental side, on the supply side, LME copper inventories increased by 14,275 mt to 153,850 mt, showing a cumulative trend over several consecutive days, which has alleviated concerns about tight supply to a certain extent. However, current inventories are still at a moderately low level compared to historical averages for the same period, and the pressure on copper prices has not fully manifested yet. On the demand side, influenced by off-season factors, downstream demand has weakened.

The SHFE copper 2509 contract closed at 78,580 yuan/mt. If we consider the most-traded BC copper 2509 contract at 69,750 yuan/mt, its after-tax price is 78,817 yuan/mt. The price spread between the SHFE copper 2509 contract and the BC copper contract is -33, indicating an inverted spread that has narrowed compared to the previous day.