BC Copper Closed Lower in Volatile Trading, Price Spread Between Domestic and Overseas Markets Continued to Widen in Inversion [SMM BC Copper Commentary]

Today, the most-traded BC copper contract 2606 opened at 92,280 yuan/mt, fluctuated upward to probe 92,850 yuan/mt in early trading, then moved sideways. During the day session, it opened lower with a gap to touch a low of 91,550 yuan/mt, after which the copper price center gradually shifted upward, ultimately closing at 92,400 yuan/mt, down 1.7%. Open interest stood at 9,388 lots, down 44 lots from the previous trading day, with trading volume at 7,146 lots, indicating bulls reducing positions. Macro perspective, US inflation data rebounded while Strait of Hormuz transit disruptions pushed up international oil prices, intensifying market concerns over rising inflation. Rate hike expectations within the year strengthened again, overall bearish for copper prices. Meanwhile, rising US Treasury yields drove the US dollar to continue strengthening, further suppressing upside room for copper prices. Fundamentals side, on the supply end, imported copper arrivals were relatively low, while domestic spot cargo sources saw some increase. Demand side, as copper prices pulled back, downstream enterprises' purchasing enthusiasm recovered, with marginal improvement in actual market transaction demand. Inventory side, as of Monday, May 18, SMM copper inventories in major regions across China decreased 400 mt WoW to 242,900 mt, with total inventory up 103,700 mt compared to the same period last year from 139,200 mt.

SHFE copper 2606 contract closed at 104,330 yuan/mt. Based on the BC copper 2606 contract at 92,400 yuan/mt, its after-tax price was 104,412 yuan/mt. The price spread between SHFE copper 2606 contract and BC copper was -82, maintaining an inversion, and narrowed notably from the previous day.