Copper prices are running high, beware of LME's sanctions on Russian metals [SMM copper morning comment]

LME copper prices opened at $9549/mt and closed at $9407/mt in last Friday evening trading, a gain of 0.49%, with the low-end of $9378/mt and the high-end of $9586/mt. Trading volume was 33,000 lots, and open interest stood at 331,000 lots. The most active SHFE 2406 copper contract prices opened at 77410 yuan/mt and closed at 76310 yuan/mt last Friday evening, down 0.04%, with the high-end of 77940 yuan/mt and the low-end of 76220 yuan/mt. Trading volumes stood at 117,000 lots and open interest stood at 201,000 lots. On the macro level, the European Central Bank hinted that it would start cutting interest rates soon, and the US dollar index rose. In addition, geopolitical tensions in the Middle East further intensified, and market risk aversion increased, which also pulled up the US dollar index and was bearish for copper prices. LME once again proposed the option of sanctions on Russian metals, and we need to be cautious about the impact on copper prices. In terms of fundamentals, from the supply side, copper prices are running at a high level, and the shipments from sellers were low. A large amount of goods have become warehouse receipts. Currently, the warehouse receipts have exceeded 300,000 tons. The market is more worried about the impact of subsequent cargoes to be offered for sale on premiums and discounts. In addition, according to SMM, many refineries are no longer in a hurry to ship goods and have begun to prepare inventory in advance for maintenance. In terms of consumption, copper prices continue to rise, and downstream companies are mostly in a wait-and-see state. Current purchases are mainly for replenishment of just-in-time needs, and market activity is not brisk. In terms of price, we need to pay attention to the specific impact of LME's metal sanctions on Russia, and copper prices may continue to rise.