Sharp Rise in Pound Lowered US Dollar Index, Copper Prices Rose Slightly

LME copper closed with a gain of 1.6% at $8,834/mt in overnight trading. Trading volume was 19,000 lots and open interest stood at 252,000 lots. The most active SHFE 2304 copper contract finished at 68,800 yuan/mt overnight, up 0.13%. Trading volume was 40,000 lots, and open at 157,000 lots.

On the macro front, the pound rose sharply and the US index pulled back. At the same time, the market is also waiting for the US February employment and consumer price data. On the domestic front, with regard to economic recovery, we need to pay attention to the upcoming Chinese manufacturing data.

In terms of fundamentals, as of Monday February 27, copper stocks in Chinese markets tracked by SMM held flat from last Friday at 325,400 mt. The current total inventory increased 128,800 mt from 196,600 mt before the Chinese New Year holidays.

Specifically, the decrease in inventory in east China is mainly due to the increase in downstream replenishment after the copper price fell and limited arriving shipments. The growth in Guangdong is attributable to maintenance at downstream producers which have not resumed production yet as well as arrivals of imported copper. In terms of consumption, after the fall of copper prices, consumption is expected to improve on the back of sufficient cash flows in March. Copper prices rose slightly due to a lower US dollar.