Rising Rate Hike Expectations Drive US Dollar Higher, Copper Futures Under Pressure Pull Back [SMM Copper Morning Comment]

SMM August 27: Overnight, LME copper opened at $14,339/mt, edged up to a high of $14,363/mt early in the session, then drifted lower to a low of $14,220/mt, finally settling at $14,232.5/mt, down 0.64%. Trading volume reached 20,000 lots, and open interest stood at 266,000 lots, an increase of 1,868 lots from the previous trading day, reflecting bears adding positions. Overnight, the most-traded SHFE copper 2610 contract opened at 108,480 yuan/mt, hit a high of 108,630 yuan/mt in the session, then drifted lower to 108,040 yuan/mt, and finally settled at 108,220 yuan/mt, down 0.49%. Trading volume reached 38,000 lots, and open interest stood at 215,000 lots, a decrease of 6,564 lots from the previous trading day, reflecting bulls reducing positions. On the macro front, the US July PCE price index rose 3.7% YoY, and expectations of interest rate hikes intensified, pushing the US dollar stronger and causing copper prices to fall under pressure. Geopolitically, Iran claimed to have reached an agreement with Oman on the distribution of revenues from the Strait of Hormuz, but later reports indicated that the two sides have not yet finalized the deal, leaving the situation uncertain. Fundamentals, supply side, affected by port congestion, the arrival and warehousing of imported copper remained slow, with limited spot supplies; demand side, high copper prices suppressed downstream purchases, and the market remained dominated by essential demand. Overall, copper prices are expected to drift lower today.