SMM Copper Morning Comment

LME copper prices opened at $8312.5/mt and closed at $8241/mt in overnight trading, a decline of 0.43%, with the low-end of $8212/mt and the high-end of $8309/mt. Trading volume was 22,000 lots, and open interest stood at 260,000 lots. The most active SHFE 2312 copper contract prices opened at 67870 yuan/mt and closed at 67600 yuan/mt last evening, down 0.32%, with the high-end of 68020 yuan/mt and the low-end of 67500 yuan/mt. Trading volumes stood at 25,000 lots and open interest stood at 135,000 lots.

On the macro front, initial jobless claims in the United States exceeded expectations last week, rising to 231,000, the highest level in the past three months. Continued jobless claims rose to 1.865 million, the highest level in the past two years. Unemployment data showed weakness in the labor market, reinforcing the view that the Federal Reserve is unlikely to raise interest rates further. In terms of fundamentals, premiums and discounts in East China shot up all the way yesterday. Spot resources were relatively tight after the delivery of the SHFE front-month contract, and premiums rose as expected. However, most downstream companies held a wait-and-see attitude and maintained mainly rigid-need purchases. It is expected that spot tightness will unlikely alleviate in the short term; inventories in South China have increased for two consecutive days, mainly due to high premiums and discounts, lowering downstream purchasing. Affected by high premiums, transactions in South China were poor yesterday. In terms of consumption, in the face of high prices, more companies were mainly replenishing goods as required. Copper prices still face resistance.