LME Copper Inventories Increased for Two Consecutive Days, Tight Supply Expectations Eased, Weighing on Copper Prices [SMM Copper Morning Comment]

SMM, August 19: Overnight LME copper opened at $14,045/mt, hit a high of $14,106.5/mt at the opening, then the price center moved lower and dipped to $13,958/mt, eventually closing at $13,961.5/mt, recording a decline of 1.2%. Trading volume was 21,000 lots, and open interest was 270,000 lots, down 276 lots from the previous trading day, reflecting long liquidation. Overnight, the most-traded SHFE copper 2609 contract opened at 107,630 yuan/mt, touched a high of 107,770 yuan/mt at the opening, then the price center moved sharply lower and hit bottom at 106,820 yuan/mt, eventually closing at 107,020 yuan/mt, posting a decline of 0.89%. Trading volume was 42,000 lots, and open interest was 186,000 lots, down 6,652 lots from the previous trading day, also reflecting long liquidation. On the macro front, geopolitical risks in the Middle East remain uncertain. Trump stated that he had no intention to restart negotiations with Iran, and Iran’s parliament speaker also said that the Strait of Hormuz would remain closed, as the risk of regional conflict has not fully eased. In addition, LME inventory increased for two consecutive days, gradually alleviating market concerns over tight supply in non-U.S. regions for the time being. This expectation exerted some bearish pressure on copper prices. From the fundamental perspective, on the supply side, with some arrivals of domestic and imported cargoes, the tight supply situation marginally improved. On the demand side, affected by the intraday pullback in copper prices, downstream enterprises’ willingness for just-in-time procurement was released to some extent, driving some spot transactions. Overall, copper prices are expected to consolidate on a subdued note within a narrow range today.