SMM Copper Morning Comment

LME copper prices opened at $8363/mt and closed at $8343/mt in overnight trading, a drop of 1.13%, with the low-end of $8327/mt and the high-end of $8377.5/mt. Trading volume was 17,000 lots and open interest stood at 288,000 lots. The most active SHFE 2401 copper contract prices opened at 67990 yuan/mt and finished at 67930 yuan/mt overnight, down 0.72%, with the low-end of 67800 yuan/mt and the high-end of 68080 yuan/mt. Trading volume was 27,000 lots and open interest stood at 148,000 lots.

On the macro front, data from the New York Federal Reserve showed that the median expectation of U.S. consumers for the inflation rate in the next year fell for the second consecutive month in November, from 3.6% in October to 3.4%, the lowest level since April 2021. The market will remain cautious as the market awaits the upcoming US CPI data. On Fundamentals, as of Monday December 11, SMM copper inventories across major Chinese markets stood at 64,700 mt, up 7,100 mt from last Friday and 43,200 mt lower than the same period last year. Due to the increase in weekend arrivals in East China and poor consumer demand amid a big price spread between front-month and next-month contracts, inventory increased; in South China, both imported copper and domestic copper have arrived in large quantities, and the demand was weak, growing the inventory significantly. In terms of consumption, as delivery is approaching and the price spread between front-month and next-month contracts is high, the overall demand is expected to be weak. There will be limited upside room for copper prices as the US dollar weighed.