SMM Copper Morning Comment: Copper prices rose further as market awaiting Fed meeting

LME copper prices opened at $8992.5/mt last Friday before reaching a low of $8992.5/mt and a high of $9098/mt, and closed at $9074/mt, a gain of 1.82%. Trading volumes were 32,000 lots and open interest stood at 306,000 lots. The most active SHFE 2405 copper contract prices opened at 72930 yuan/mt and finished at 73290 yuan/mt overnight, up 1.23%, with the low-end of 72700 yuan/mt and the high-end of 73440 yuan/mt. Trading volume was 90,000 lots and open interest stood at 233,000 lots. On the macro front, Japanese media stated that the Bank of Japan is making final arrangements to end the negative interest rate policy at this week’s policy-making meeting, and attention needs to be paid to its actual interest rate decision. The Federal Reserve's interest rate decision and dot plot will be released this week, which will affect market expectations for when the United States will start to cut interest rates. Domestically, the balance of broad money (M2) was 299.56 trillion yuan, a year-on-year increase of 8.7%, which has a certain boost to market sentiment. In terms of fundamentals, domestic inventories are still showing a continuous backlog and domestic supply is still relatively ample. However, under the influence of rising copper prices, the recovery of terminal demand has been dragged down. The inventories of processing companies are relatively high. It is expected that the oversupply pattern will further deepen. In terms of price, market sentiment is still affected by the joint production cuts. Before the Federal Reserve releases the dot plot, copper prices are expected to remain high.