SMM Copper Morning Comment

LME copper prices opened at $8405.5/mt and closed at $8376.5/mt in overnight trading, a drop of 1.1%, with the low-end of $8327/mt and the high-end of $8424/mt. Trading volume was 18,000 lots, and open interest stood at 262,000 lots. The most active SHFE 2401 copper contract prices opened at 68020 yuan/mt and closed at 67720 yuan/mt last evening, down 0.44%, with the high-end of 67970 yuan/mt and the low-end of 67550 yuan/mt. Trading volumes stood at 29,000 lots and open interest stood at 156,000 lots.

On the macro front, The US initial jobless claims recorded 209,000 in the week ending November 18, lower than expected 226,000, a new low since the week ending October 14. Continued initial jobless claims in the United States fell for the first time in two months. Perhaps because the market believes that the U.S. labor market is not cooling as quickly as expected, the U.S. dollar index rebounded from a two-and-a-half-month low. In terms of fundamentals, the premiums and discounts in East China fell as expected yesterday, and the market was bearish on the market outlook. Supplies from sellers increased, and downstream procurement also picked up. If the price spread between front-month and next-month contracts can remain stable, it is expected that spot premiums and discounts in East China will remain stable; inventories in South China have fallen for two consecutive days, combined with the decline in copper prices, sellers kept prices firm. But downstream processing companies do not buy it. Actual transactions were quiet. At present, the price difference between Shanghai and Guangdong is widening, and some supply from East China may be sent to South China in the near term. In terms of consumption, demand in East China has increased due to the fall in spot quotes. There will be limited upside room for copper prices as the US dollar weighed.