Geopolitical Risks Cooled Down, Overnight Copper Prices Strengthened [SMM Copper Morning Comment]

SMM, July 10: Overnight, LME copper opened at $13,418.5/mt. In early trading, the price center dipped to $13,397.5/mt, then drifted higher, touching a high of $13,551/mt near the end of the session, and finally settled at $13,481/mt, up 1.71%. Trading volume reached 21,800 lots, and open interest stood at 247,000 lots, up 674 lots from the previous trading day, reflecting bulls adding positions. Overnight, the most-traded SHFE copper 2608 contract opened at 103,750 yuan/mt. In early trading, the price center dipped to 103,420 yuan/mt, thereafter drifted higher, touching a high of 104,250 yuan/mt near the end of the session, and finally settled at 103,920 yuan/mt, up 1.58%. Trading volume was 40,100 lots, and open interest was 153,000 lots, down 545 lots from the previous trading day, reflecting bears reducing positions. On the macro front, Trump stated that Iran has shown willingness for peace talks, and other sources indicated that Iran has no intention of escalating the conflict. Combined with Pakistan's ongoing mediation efforts, the window for US-Iran negotiations is expected to reopen, easing market concerns over the escalation of the Middle East conflict and providing a boost to copper prices. Fundamentals side, supply side, arrivals of imported material were low and domestic arrivals remained at low levels. Demand side, the approaching typhoon led to concentrated early cargo pick-up by downstream users, but overall industry consumption was still in the traditional off-season, with limited sustained demand growth. Inventory side, as of Thursday, July 9, SMM copper inventories in major Chinese regions were down 34,900 mt WoW from last Thursday to 165,000 mt, with total inventories up 21,300 mt compared to 143,700 mt in the same period last year. Overall, copper prices are expected to consolidate on a strong note today.