Supply-Side Concerns Intensify Disruptions, Copper Prices Fluctuate Upward Intraday [SMM BC Copper Commentary]

Today, the most-traded BC copper contract 2606 opened at 94,900 yuan/mt, touching a low of 94,350 yuan/mt right at the open. Copper prices then fluctuated upward throughout the session, reaching a high of 96,800 yuan/mt during the morning trading session after the daytime open, and ultimately fluctuated at highs to close at 96,420 yuan/mt, up 2.03%. Open interest stood at 10,100 lots, an increase of 486 lots from the previous trading day. Trading volume reached 12,283 lots, an increase of 2,023 lots from the previous trading day. On the macro front, US April CPI rose to 3.8% YoY, exceeding expectations, with energy contributing 40% of the increase. Waller was confirmed as a governor appointee, and the market priced in approximately 10 basis points of rate hikes before year-end. On the Iran front, the US stated that the ceasefire remained in effect and had an escalation plan in place, planning to rename the war to circumvent authorization time limits. Iran demanded an end to hostilities and the lifting of the blockade first, while the UK will deploy forces to the Strait of Hormuz. Additionally, expectations for SX-EW copper production cuts due to sulfur shortages, mine production resumptions falling short of expectations, and Peru's emergency decree collectively intensified market concerns over supply, driving copper prices higher. Fundamentals side, supply side, as delivery approached, suppliers showed stronger willingness to ship to delivery warehouses, and the spot supply landscape remained tight. Demand side, affected by persistently rising copper prices, market trading activity was subdued.

SHFE copper 2606 contract closed at 108,510 yuan/mt. Based on the BC copper 2606 contract price of 96,420 yuan/mt, its after-tax price was 108,954 yuan/mt. The price spread between SHFE copper 2606 and BC copper was -444 yuan/mt, showing an inversion that widened compared to the previous day.