Supply concerns ease slightly; overnight copper prices consolidate on a subdued note [SMM Copper Morning Comment]

SMM, October 20: Overnight, LME copper closed up 0.09%, driven by bear position reductions; SHFE copper closed down 0.26%, driven by bull position reductions. LME inventory rebound and the end of an overseas copper mine strike eased supply concerns, while unrest in Europe pressured the euro and boosted the US dollar. As a result, copper prices are expected to consolidate on a subdued note in a narrow range today.

1. Overnight Futures

LME copper: Opened at $14,391/mt, hit a high of $14,412/mt, a low of $14,270/mt, and closed at $14,372.5/mt, up 0.09%. Trading volume was 17,000 lots, with open interest at 268,000 lots, down 1,065 lots from the previous trading day, reflecting bear position reductions.

Most-traded SHFE copper 2611 contract: Opened at 109,010 yuan/mt, hit a high of 109,560 yuan/mt, a low of 108,860 yuan/mt, and closed at 109,560 yuan/mt, down 0.26%. Trading volume was 29,000 lots, with open interest at 168,000 lots, down 30 lots from the previous trading day, reflecting bull position reductions.

2. Macro Front

LME copper inventories increased, hitting a two-month high; meanwhile, the strike at Antofagasta's Centinela copper mine in Chile ended, jointly easing market concerns over tight supply. At the same time, violent protests in France dragged the euro lower, while the US dollar index stabilized and closed higher.

3. Fundamentals

Supply side: Arrivals of imported copper edged up, while arrivals of domestic copper pulled back. Demand side: Downstream wait-and-see sentiment remained strong, and overall consumption was weak. Inventory side: As of Monday, October 19, SMM copper inventories in major Chinese markets fell 900 mt WoW from the previous Monday to just above 100,000 mt, with total inventories down more than 70,000 mt from the same period last year, when they stood above 180,000 mt.