A weakening US dollar supported copper prices, and overnight copper prices drifted higher [SMM copper morning comment]

SMM July 31: Overnight, LME copper opened at $13,754.5/mt, dipped to a low of $13,740/mt in early trading, then the price center rose to a high of $13,836/mt, before moving sideways in a narrow range to finally settle at $13,978.5/mt, up 1.3%. Trading volume reached 18,000 lots, with open interest at 246,000 lots, down 342 lots from the previous trading day, mainly driven by bearish position reductions. Overnight, the most-traded SHFE copper 2609 contract opened at 105,370 yuan/mt, dipped to a low of 105,250 yuan/mt early on, then the price center climbed to a high of 105,750 yuan/mt, and finally moved sideways to settle at 105,560 yuan/mt, up 0.75%. Trading volume totaled 40,000 lots, with open interest at 197,000 lots, up 1,132 lots from the previous trading day, mainly due to bullish position additions. On the macro front, Japan and the US jointly intervened in the currency market to curb yen depreciation, causing the USD/JPY to plunge; meanwhile, US June PCE data came in below expectations, both of which pushed the US dollar index lower and lent support to copper prices. Fundamentals-wise, supply side arrivals of imported and domestic copper improved slightly, marginally easing the tight supply situation; demand side, affected by the traditional consumption off-season and high copper prices, downstream enterprises mainly made just-in-time procurement. In terms of inventories, as of Thursday, July 30, SMM data showed that copper inventories in major Chinese markets increased by 2,700 mt WoW to 111,900 mt, but were down 800 mt from Monday. Total inventories fell 7,400 mt from the 119,300 mt seen a year earlier. Overall, copper prices are expected to drift higher in a narrow range today.