SMM Copper Morning Comment

LME copper prices opened at $8497/mt and closed at $8427/mt in overnight trading, a drop of 2.3%, with the low-end of $8427/mt and the high-end of $8515/mt. Trading volume was 26,000 lots, and open interest stood at 279,000 lots. The most active SHFE 2401 copper contract prices opened at 68380 yuan/mt and closed at 68190 yuan/mt last evening, down 0.9%, with the high-end of 68560 yuan/mt and the low-end of 68070 yuan/mt. Trading volumes stood at 34,000 lots and open interest stood at 167,000 lots.

On the macro front, U.S. factory orders fell by 3.6% on a monthly basis in October, which was larger than the expected 2.6% drop and was the lowest level since April 2020. A report released by the New York Fed on Monday showed that its multi-core trend inflation measure (MCT) was at 2.6% in October, down from 2.88% in September. In addition, First Quantum reached an agreement with the Zambian Mining Company to accelerate the development of the Fishtie copper mine. On Fundamentals, as of Monday December 4, SMM copper inventories across major Chinese markets stood at 54,000 mt, down 900 mt from last Friday and 53,400 mt lower than the same period last year. Neither imported copper nor domestic copper arrived in large quantities in East China, causing inventories to decline. In South China, as copper processing companies that had suspended production previously resumed production one after another, the recovery in demand also led to a decline in inventories in South China. In terms of consumption, high market prices coupled with high premiums still suppress downstream demand. Due to the influence of low inventory, copper prices will rebound in the near future.