Copper Prices to Gain with Upbeat Sentiment on Consumption in Mar

SHANGHAI, Mar 1 (SMM) - LME copper opened at $8,859/mt, touching low and high at $8,850/mt and $8,987/mt respectively, and closed with a gain of 1.65% at $8,980/mt in overnight trading. Trading volume was 18,000 lots and open interest stood at 251,000 lots.

The most active SHFE 2304 copper contract opened lower at 69,140 yuan/mt and finished at 69,760 yuan/mt overnight, up 1.5%. Trading volume was 46,000 lots, and open interest stood at 153,000 lots.

On the macro front, US inflation remained high and the market expected the interest rates to remain elevated for some time. The US dollar index rallied slightly. In China, despite the poor copper demand in February, the market is looking forward to a strong recovery in March. Fundamentally, domestic smelters and traders currently hold sufficient stocks, and the inventory in Guangdong already exceeded 70,000 mt and is still climbing. On Monday, traders lowered their quotes significantly to promote sales, and the tight cash flow at the end of the month was eased. Yesterday, they started to hold prices firm based on bullish sentiment, while downstream enterprises were cautious about purchasing.

In terms of consumption, the downstream buyers increased their purchases on falling copper prices, but the end demand had not picked up yet. It is expected that the consumption will improve after the Two Sessions are held this week. SMM estimates that copper prices will rebound on technical factors and a potential turnaround in domestic demand.