SMM Copper Morning Comment

LME copper prices opened at $8526/mt and closed with a drop of 0.71% at $8464/mt last Friday evening, with the low-end of $8454/mt and the high-end of $8544.5/mt. The trading volume was 20,000 lots, and open interest stood at 285,000 lots. The most traded SHFE 2403 copper opened at 68800 yuan/mt last Friday night and closed at 68730 yuan/mt, down 0.15%. The contract fell to 68610 yuan/mt after climbing to 68850 yuan/mt. Trading volume was 16,000 lots, and open interest stood at 138,000 lots. On the macro front, the U.S. non-farm payrolls increased by 355,000 more than expected after seasonally adjustment in January, the unemployment rate remained stable in January, and wage growth reached 0.6%, a new high since March 2022. Strong labor market data pushed the U.S. dollar index higher. At the same time, dragged down by weak domestic demand, copper prices are generally under pressure. In terms of fundamentals, from the supply side, inventories continue to rise, and some low-priced imported copper may still flow in before the holidays. In terms of consumption, most companies have gradually completed their inventory preparations and entered the Spring Festival holiday, with very few replenishments. Spot transactions are expected to become increasingly deserted. Overall, there is no supply shortage expected due to increased inventory and weak demand. In terms of price, on the whole, strong labor market data has pushed the U.S. dollar index higher. At the same time, as the Chinese New Year approaches, domestic consumption has become increasingly quiet, and copper prices are expected to be under pressure.