SMM Copper Morning Comment: Copper prices rose on falling US dollar

LME copper prices opened at $8445.5/mt and closed at $8522/mt in last Friday evening trading, a gain of 0.51%, with the low-end of $8445.5/mt and the high-end of $8634/mt. Trading volume was 16,000 lots, and open interest stood at 285,000 lots. The most active SHFE 2404 copper contract prices opened at 68870 yuan/mt and closed at 69060 yuan/mt last evening, up 0.15%, with the high-end of 69240 yuan/mt and the low-end of 68840 yuan/mt. Trading volumes stood at 18,000 lots and open interest stood at 147,000 lots. On the macro front, the U.S. consumer confidence index released last Friday was lower than market expectations, and its ISM manufacturing PMI in February also fell below market expectations, reinforcing expectations that the Federal Reserve will cut interest rates in June. In addition, the decline in LME inventories also supported copper prices. On the fundamentals, as of Feb 29, SMM copper inventories in major Chinese markets added 7,400 mt to 305,700 mt from last Monday, and up 137,400 mt from pre-CNY levels. From the supply side, most refineries have digested most of the inventory accumulated during the holiday in the two weeks after the holiday. However, due to insufficient recovery in current consumer demand, there was still a large supply of goods in the hands of cargo holders, so the overall supply was still relatively abundant. In terms of consumption, demand from processing companies will continued to recover in March, and demand for copper is expected to be stronger than last week. In terms of price, on the occasion of China's two political sessions, the market has optimistic expectations for domestic economic policies. Coupled with the decline of the U.S. index, copper prices are expected to rise.