SMM Copper Morning Comment

LME copper prices opened at $8586.5/mt and closed at $8532.5/mt last evening, a drop of 0.34%, with the low-end of $8511/mt and the high-end of $8571/mt. Trading volume was 18,000 lots open interest stood at 273,000 lots. The most active SHFE 2402 copper contract prices opened at 68670 yuan/mt and finished at 68660 yuan/mt overnight, with the high-end of 68850 yuan/mt and the low-end of 68500 yuan/mt, down 0.23%. Trading volume was 23,000 lots, and open interest stood at 139,000 lots. On the macro side, traders have lowered their expectations for the Federal Reserve to cut interest rates, and the U.S. index has accelerated its recovery, suppressing copper prices. In addition, U.S. employment data and Federal Reserve meeting minutes and other data and events to be released this week will also continue to have an impact on copper prices. On the fundamentals, as of Monday January 2, SMM copper inventories in major Chinese markets grew 5,200 mt to 71,600 mt compared with last Friday. The total inventory dropped by 37,700 mt compared with the same period last year when the inventory was recorded at 109,300 mt. Increased arrivals and fewer shipments have led to a large increase in post-holiday inventory. This, coupled with weak consumption, will ensure adequate supply this week. In terms of consumption, inventories have increased significantly after the holiday. However, due to the increase in holding costs during the holiday, sellers raised prices. But many downstream have prepared stocks in advance. Actual transactions were lukewarm. If copper prices remain stable and premiums decline, it is expected that transactions will increase. There will be limited upside room for copper prices as the US dollar index rose faster.