Copper prices went down as US job growth exceeds expectations in December (SMM copper morning comment)

LME copper prices opened at $8419/mt and closed at $8415/mt last Friday evening, a drop of 0.78%, with the low-end of $8400/mt and the high-end of $8520/mt. Trading volume was 23,000 lots, and open interest stood at 278,000 lots. The most active SHFE 2402 copper contract prices opened at 68190 yuan/mt and finished at 68300 yuan/mt last Friday evening, down 0.07%, with the low-end of 68140 yuan/mt and the high-end of 68550 yuan/mt. Trading volume was 26,000 lots and open interest stood at 125,000 lots. On the macro front, data showed that U.S. job growth accelerated in December last year and wages rose more than expected, reducing the possibility of the Federal Reserve cutting interest rates in March. The U.S. Dollar index ran at high levels, suppressing copper prices. On the fundamentals, as of Friday January 5, SMM copper inventories in major Chinese markets added 5,300 mt from last Monday to 79,600 mt, up 10,500 mt from two Fridays ago. Inventories have fallen for two consecutive weeks. From the supply side, although the inventory has increased, it is mainly due to the large amount of imported copper. The mainstream standard-quality copper circulating in the market was limited, and the sellers kept prices firm. Overall, the continued increase in inventories will alleviate market concerns about tight supply. In terms of consumption, the fall in copper prices coupled with reduced financial pressure on companies are expected to drive companies to stock up before the Chinese New Year, and demand will pick up. In terms of price, the U.S. index is running at a high level and domestic demand is gradually entering the off-season, and copper prices are still under pressure.