LME copper prices closed at $8,277/mt last evening, down 0.55%. Trading volume was 13,000 lots and open interest stood at 255,000 lots. The most active SHFE 2308 copper contract finished at 67,660 yuan/mt overnight, down 0.32%. Trading volume was 32,000 lots and open interest stood at 188,000 lots.
On the macro front, the number of ADP employment in the United States surged by 497,000 in June, up sharply compared to the expected 228,000, the largest monthly increase since February last year. The US labour market remains strong, raising the odds that the Federal Reserve will raise interest rates later this month. The US ISM non-manufacturing PMI rose to 53.9 in June from 50.3 in May, suggesting that inflation in the closely watched services sector will continue to cool.
In terms of fundamentals, the price spread between the SHFE front-month and SHFE next-month copper contracts fluctuated frequently, and downstream buyers were cautious. The backwardation of the SHFE front-month copper contract against the SHFE next-month copper contract stood at around 300 yuan/mt, lowering spot quotes in east China.
The inflows of imported copper also weighed on spot quotes significantly. South China was also affected by the price spread. Trading activities in the spot market were subdued. Demand is gradually weakening due to the traditional off-season, and is expected to remain weak in the short term. Affected by macro sentiment, the strong employment data in the US made the US index higher, and copper prices were under pressure.
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