The Most-Traded BC Copper Contract Closed Down 0.69%, Inflation Concerns Weigh on Expectations for Interest Rate Cuts [SMM BC Copper Commentary]

Today, the most-traded BC copper 2604 contract opened at 89,260 yuan/mt. Early in the session, the center moved lower and hit bottom at 88,740 yuan/mt, then the center rose all the way, touching a high of 90,860 yuan/mt near the close, and finally settled at 90,220 yuan/mt, down 0.69%. Open interest rose to 5,896 lots, an increase of 88 lots from the previous trading day, while trading volume rose to 8,845 lots, down 276 lots from the previous trading day. On the macro front, the situation in Iran continued to escalate, with intensified military maneuvering among parties, and the US Senate sought to limit Trump’s war powers; the market worried that tensions in the Middle East would further push up inflation expectations, driving the US dollar index to close higher, which was bearish for copper prices. In addition, high inflation expectations in the US weakened market expectations for further US Fed interest rate cuts, also weighing on copper prices. On the fundamentals, domestically produced copper and previously price-locked imported supplies continued to arrive, and overall market circulating supply remained ample. Demand side, consumption recovered, and purchase willingness continued to rebound.

The SHFE copper 2604 contract settled at 101,660 yuan/mt. Based on the BC copper 2604 contract at 90,220 yuan/mt, its after-tax price was 101,949 yuan/mt. The price spread between the SHFE copper 2604 contract and BC copper was -289 yuan/mt, with the spread remaining in backwardation and widening from the previous day.