Weak Demand Suppresses Copper Prices [SMM Copper Morning Comment]

Overnight, LME copper opened at $10,004.8/mt, peaked at $10,024.5/mt during early trading, then dipped to a session low of $9,914/mt at the end of the trading session, and finally closed at $9,933.5/mt with open interest at 343,000 lots. Overnight, the most-traded SHFE copper contract opened at ¥80,960/mt, peaked at ¥81,060/mt during early trading, then maintained slight fluctuations throughout, hitting a session low of ¥80,320/mt, and finally closed at ¥80,500/mt, down by 1.9%. Trading volume was 82,000 lots and open interest was 181,000 lots. On the macro front, the US non-farm payrolls data is about to be released. The US dollar index rebounded from recent lows due to elevated sentiment, while domestic demand remained weak in the long run, putting pressure on copper prices. Additionally, US job openings in April fell to their lowest level since 2021. Following the data release, US Fed rate swaps indicated an accelerated pace of rate cuts in 2024. A regulation issued by Indonesia's Ministry of Finance on Tuesday showed a 7.5% export tax on copper concentrate exports, also applicable to two companies currently exempt from the export ban. On the fundamentals side, the supply side saw a continuous arrival of domestic and imported copper, with low-price imported copper also flowing in. On the consumption side, as copper prices dipped and the delivery month approached, the premium continued to rise, but overall demand showed no significant recovery. If copper prices continue to fall, a consumption rebound might be seen. In summary, the rebound of the US dollar index pressured copper prices lower, but with the accelerated pace of rate cuts and slow recovery in demand, copper prices might find support at the bottom. Today, the market will focus on the US non-farm payrolls data.