Copper Prices Strengthened Overnight on Lower US Dollar Index

LME copper closed at $9,111/mt last evening, a gain of 1.13%. Trading volume was 13,000 lots and open interest stood at 262,000 lots. The most active SHFE 2303 copper contract finished at 69,950 yuan/mt overnight, up 1.32%. Trading volume was 21,000 lots, and open interest stood at 124,000 lots. On the macro front, the U.S. dollar index fell as a number of strong economic data released earlier enhanced market expectations for the Fed to continue raising interest rates. As of Monday February 20, copper stocks in mainstream markets tracked by SMM increased 4,500 mt to 329,900 mt compared with Friday February 17. Despite limited arriving shipments of imported copper, downstream consumption has weakened, growing inventories. At present, the total inventory has increased by 133,300 mt compared with 196,600 mt before Chinese New Year holidays. Only Shanghai saw inventory declines over the weekend, while the inventory in Guangdong and Chongqing increased. Those in other regions did not change much. SMM understood that several copper rod plants stopped production due to overly high finished product inventory. This can be also reflected in the precipitous decline in daily average shipments from Guangdong warehouses. Although the recent performance of the US dollar index is strong, the domestic macroeconomic front is positive. Copper prices are expected to remain rangebound at high levels.