[SMM Copper Morning Analysis] Copper Prices Still Range-Bound; UK CPI Data Below Market Expectations

On July 20th, the overnight copper price on the London Metal Exchange (LME) opened at $8,382 per tonne. It initially declined to touch a low of $8,361 per tonne, but then steadily rose throughout the session. After a brief pullback, it climbed again, and by the end of the session, it consolidated sideways and touched a high of $8,434.5 per tonne, ultimately closing at $8,432.5 per tonne. Trading volume reached 16,000 lots, and open interest stood at 267,000 lots, with a decline of 0.34%.

Meanwhile, the overnight copper main contract (2308) on the Shanghai Futures Exchange (SHFE) opened at 68,450 yuan per tonne. After experiencing some initial volatility, it declined and touched a low of 68,340 yuan per tonne during the session. However, it rebounded and consolidated sideways towards the end, reaching a high of 68,600 yuan per tonne before closing at 68,560 yuan per tonne. Trading volume reached 24,000 lots, and open interest stood at 171,000 lots, with a rise of 0.13%.

On the macroeconomic front, the UK's Consumer Price Index (CPI) for June, released on Wednesday, fell to a more than one-year low year-on-year. This led to a significant drop in the pound sterling against other major currencies, causing a rebound in the US Dollar Index (DXY). In the United States, no major data was released, and the market is anxiously awaiting the results of the upcoming Federal Reserve interest rate meeting next week.

Regarding fundamentals, the spot premiums in East China declined throughout the day. Although the copper price's center of gravity has shifted slightly downward, the limited demand during the off-season has resulted in inventory accumulation among traders. Despite offering discounts, overall trading activity remains subdued. In South China, the premiums also decreased due to weak consumption. While traders are active in destocking due to narrowing contango spreads, downstream willingness to accept the material is low. As for consumption, if copper prices continue to remain high, downstream companies will only maintain just-in-time restocking, making it difficult to see any improvement in the short term.

In terms of prices, the market is waiting for the US interest rate meeting. Recently, copper prices have remained relatively high and range-bound.

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