Japan's Interest Rate Hike Implemented, Negative Factors Exhausted; BC Copper 2601 Fluctuated and Closed Higher [SMM BC Copper Commentary]

Today, the most-traded BC copper 2601 contract opened at 84,100 yuan/mt. It fluctuated considerably at the beginning of the session, then fluctuated upward. After the daytime session opened, it climbed to a high of 85,170 yuan/mt. Subsequently, the center of copper prices gradually moved down, touching a low of 84,070 yuan/mt, and finally closed at 84,900 yuan/mt, a gain of 1.93%. Open interest reached 3,826 lots, down 149 lots from the previous trading day, while trading volume reached 6,946 lots. On the macro front, the Bank of Japan raised interest rates by 25 basis points as expected, but the market has not yet formed a clear expectation regarding the timing of its future rate hikes. Related trading expectations were already digested in advance, with the negative factors being fully priced in. Additionally, several US Fed officials expressed hawkish views on further interest rate cuts, causing the market's probability expectation for the Fed holding rates steady in January to climb to 79%. On the fundamentals, supply side, arrivals of both imported and domestic materials increased. Demand side, affected by high copper prices, downstream purchasing sentiment was suppressed. Inventory side, as of Monday, December 22, SMM copper inventories in mainstream regions across China increased by 1.57% WoW.

The most-traded SHFE copper 2601 contract closed at 94,110 yuan/mt. Based on the BC copper 2601 contract price of 84,900 yuan/mt, its post-tax price is 95,937 yuan/mt. The price spread between the SHFE copper 2601 contract and BC copper was -1,827, maintaining an inverted spread which widened from the previous day.