SMM Copper Morning Comment

LME copper prices opened at $8257/mt overnight before reaching a low of $8233.5/mt and a high of $8291/mt, and closed at $8276.5/mt, a rise of 0.78%. Trading volumes were 21,000 lots and open interest stood at 262,000 lots. The most active SHFE 2312 copper contract prices opened at 67940 yuan/mt and finished at 67910 yuan/mt overnight, up 0.28%, with the low-end of 67700 yuan/mt and the high-end of 67990 yuan/mt. Trading volume was 23,000 lots and open interest stood at 140,000 lots.

On the macro front, retail sales in the US recorded -0.1% in October, compared to the expected -0.3%. The U.S. PPI index in October was weaker than expected, recording -0.5%, the largest decline since April 2020. In terms of fundamentals, in East China yesterday, as most sellers began to quote against the next month contract, spot quotes rose. However, as the price difference between the front-month and next-month contracts widened, downstream acceptance gradually declined, and sellers did not continue to increase premiums. It is expected that the downstream purchase will be poor after the delivery of the SHFE front-month contract; the South China market also performed poorly. With delivery approaching, the enthusiasm for downstream purchasing dropped significantly. Sellers also lowered prices, but the overall transaction volume was still average. Downstream purchases will pick up to a certain extent after the delivery of the SHFE front-month contract. There will be limited room for copper price increases.