LME copper prices opened at $8,462.5/mt on Tuesday, and hiked to a high of $8,540.5/mt towards the closing session after dropping to a low of $8,437.5/mt in early session, and finally closed up 1.23% at $8,531/mt. Trading volumes were 19,000 lots, and open interest was 290,000 lots. The most-traded SHFE 2403 copper contract opened at 68,460 yuan/mt, and kept creeping up to a high of 68,880 yuan/mt after hitting a low of 68,460 yuan/mt, and finally closed up 0.69% at 68,840 yuan/mt. Trading volume was 16,000 lots and open interest was 107,000 lots.
On the macro front, the PBC announced the latest loan market quotation rate (LPR), seeing stable 1-year LPR at 3.45% and a drop by 25 basis points to 3.95% in the 5-year and above LPR, the largest drop in a month, which shored up confidence in the domestic economy. In addition, the lower US dollar index also lifted copper prices. In terms of fundamentals, on the supply side, refineries’ overstocking during the holidays made sellers more willing to lower prices, while downstream sectors not fully resumed production yet. Transactions were minimal. In terms of demand, most processing companies resumed production, but demand will take time to pick up. There was only rigid demand from some small factories. In terms of copper price, it will still take time for domestic market to recover fundamentally. Optimistic macro sentiment boosted market confidence. And there was continued overseas inventory slip. In a word, copper prices may remain high.
