SMM Copper Market Morning Comment (May 7)

The LME was closed. Overnight, SHFE copper prices opened at 81,300 yuan/mt, with its session high and low at 81,680 yuan/mt and 81,120 yuan/mt before closing at 81,270 yuan/mt, up 0.46%. Trading volume was 33,000 lots and open interest stood at 188,000 lots. Copper prices remained strong due to expectations of a rate cut by the Federal Reserve and support from the geopolitical situation. According to foreign media on May 6, First Quantum said on Monday that it was seeking dialogue with the new Panamanian government on the differences over the Cobre Panama copper mine to jointly find a solution. Last Sunday, Jose Raul Mulino was elected as the new president of Panama. Fundamentally, copper prices were still at a high level, suppressing downstream consumption. Therefore, companies adopted a wait-and-see stance and consumption did not see a significant recovery. In addition, as many copper rod factories stopped production during the Labour Day holiday, smelters sent more goods to warehouses. As of May 6, SMM copper inventory in China's major regions increased by 16,800 mt WoW to 404,700 mt. During the Labour Day holiday, copper inventories in China’s all regions rose. Looking ahead, with approaching delivery and large spot discount, it is expected that smelters will continue to expand the quantity sent to warehouses. At the same time, imported copper is also arriving in succession. However, due to the recent export plans of smelters, domestic supply will be reduced. Therefore, inventory growth is expected to be limited this week. If there is new progress in resolving the disputes over First Quantum's Cobre copper mine, copper prices are expected to fall back.