SMM Copper Morning Comment

LME copper prices opened at $8460/mt overnight before reaching a low of $8408.5/mt and a high of $8473/mt, and closed at $8470/mt, a rise of 0.27%. Trading volumes were 23,000 lots and open interest stood at 264,000 lots. The most active SHFE 2401 copper contract prices opened at 68040 yuan/mt and finished at 68230 yuan/mt overnight, up 0.25%, with the low-end of 67880 yuan/mt and the high-end of 68250 yuan/mt. Trading volume was 26,000 lots and open interest stood at 152,000 lots.

On the macro front, the U.S. dollar index stopped falling as the minutes of the Federal Reserve meeting indicated that the Federal Reserve will maintain restrictive policies in the long term. In addition, the total number of existing home sales in the United States in October was recorded at an annualized rate of 3.79 million units, the lowest level since August 2010. In terms of fundamentals, premiums and discounts in East China began to move downward yesterday, mainly due to the influx of imported copper that alleviated spot tightness to a certain extent. In addition, the higher market prices inhibited downstream purchasing, and sellers lowered premiums in order to ship goods. In terms of consumption, high copper prices coupled with high premiums will suppress demand. Copper prices may remain rangebound at highs in the near term.