Copper Prices Fell Overnight on Weak Demand [SMM Copper Morning Comment]

Overnight, LME copper opened at $10,180.5/mt, dropped slightly to a session low of $10,058.5/mt at the beginning of the session, then rebounded to an intraday high of $10,201/mt, and subsequently maintained consolidation, finally closing at $10,125/mt, with a decline of 3.34%. Trading volume reached 34,000 lots, and open interest reached 346,000 lots. Overnight, the most-traded SHFE 2407 copper contract opened at ¥82,000/mt, reaching an intraday high of ¥82,530/mt at the beginning of the session and a session low of ¥81,830/mt at the end of the trading session, finally closing at ¥82,130/mt, with a decline of 2.02%. Trading volume reached 82,000 lots, and open interest reached 195,000 lots.

On the macro front, the revised value of the US Q1 GDP annualized rate was lowered to 1.3%, the lowest since Q1 2023, with both consumer spending and inflation declining. US Fed officials reiterated that it is too early to consider rate cuts. Concerns over high copper prices and interest rates inhibiting consumption demand prompted funds to sell off long positions to take profits, causing copper prices to break support levels and fall.

On the fundamentals side, supply continues to increase, and on the consumption side, lower copper prices have led to a slight recovery in consumption, with downstream restocking on a just-needed basis. However, the unexpected rise in premiums has suppressed overall purchasing. As of Thursday, May 30, SMM copper stocks in major markets in China increased by 19,000 mt from Monday to 443,500 mt, up 28,400 mt from last Thursday, continuing to hit a new high for the year.

In summary, social inventories continue to hit new highs for the year, demand remains weak, and longs are taking profits. However, given the optimistic outlook for medium and long-term demand, copper prices are unlikely to continue declining significantly. Today, attention will be on China's manufacturing PMI.