Risk appetite continued to pull back, LME copper and SHFE copper both closed lower [SMM Copper Morning Comment]

SMM, November 4: Overnight, LME copper closed down 2.03%, driven by increased bearish positioning; SHFE copper closed down 0.64%, driven by reduced bullish positioning. On the macro front, Trump said interest rate cuts could balance the budget. Although the US and Iran made mutual concessions on nuclear issues and assets, they remain far from a deal. During this period, the US launched a "small-scale attack" on Iran, and negotiations saw no new progress. Combined with the approaching US midterm elections and subdued risk sentiment, copper prices moved lower. Copper prices are expected to consolidate on a subdued note within a narrow range today.

1. Overnight Futures LME copper: Opened at $13,971/mt, hit a high of $14,149.5/mt, a low of $13,933/mt, and closed at $14,325.5/mt, down 2.03%. Trading volume was 34,000 lots, and open interest was 250,500 lots, up 3,802 lots from the previous trading day, reflecting increased bearish positioning. The most-traded SHFE copper 2612 contract: Opened at 106,400 yuan/mt, hit a high of 107,160 yuan/mt, a low of 106,200 yuan/mt, and closed at 106,540 yuan/mt, down 0.64%. Trading volume was 49,900 lots, and open interest was 190,400 lots, down 313 lots from the previous trading day, reflecting reduced bullish positioning.

2. Macro Front Trump said that if the US Fed cuts interest rates, the US could achieve a balanced budget. In the Middle East, sources said the US and Iran made concessions on nuclear issues and frozen assets. The Iranian president said the supreme leader allowed negotiations on "non-negotiable" topics, but senior Iranian officials said the two sides remain far from reaching an agreement. Trump confirmed that the US launched a "small-scale attack" on Iran in the early hours of November 3 Beijing time, calling it "not a war," while Iran's foreign ministry said negotiations have made no new progress and all parties continue to exchange information through mediators. Combined with the approaching US midterm elections, market risk sentiment remained subdued, and copper prices moved lower.

3. Fundamentals Supply side: Available supply remained tight, suppliers held limited inventories, and willingness to sell was weak. Demand side: Downstream buyers maintained a strong wait-and-see sentiment, purchasing enthusiasm did not improve significantly, and transactions remained primarily need-based.