SMM Copper Morning Comment

LME copper prices opened at $8590/mt and closed at $8525/mt last Friday evening, a drop of 0.07%, with the low-end of $8471/mt and the high-end of $8605/mt. Trading volume was 20,000 lots, and open interest stood at 289,000 lots. The most active SHFE 2401 copper contract prices opened at 68610 yuan/mt and finished at 68670 yuan/mt last Friday evening, down 0.03%, with the low-end of 68330 yuan/mt and the high-end of 68750 yuan/mt. Trading volume was 21,000 lots and open interest stood at 146,000 lots. On the macro front, Williams, the "third in command" of the Federal Reserve and President of the New York Fed, strongly criticized the market's interest rate cut expectations, saying that the Federal Reserve has not really discussed cutting interest rates and it is too early to consider cutting interest rates in March next year. However, the rebound of the U.S. index has been limited. In addition, ECB policymakers are not expected to change their message on stabilizing interest rates before next March's meeting, with policymakers saying it would be difficult to cut interest rates before June. On the fundamentals, as of Friday December 15, SMM copper inventories in major Chinese markets decreased 1,700 mt to 63,000 mt from last Monday, up 5,400 mt from two Fridays ago. Although there is a replenishment of imported copper in East China, due to lower premiums and discounts, downstream purchasing enthusiasm was acceptable, lowering the inventory; in South China, domestic copper arrivals increased, but due to the high price spread between front-month and next-month contracts before delivery, downstream demand was weak. Downstream purchases will pick up to a certain extent after the delivery of the deliveries to SHFE front-month contract. The copper prices will meet resistance.