SMM Copper Morning Comment: Copper prices continue to rise overnight, market remains concerned about CME short squeeze

LME copper prices opened at $10385/mt and closed at $10371.5/mt in last evening trading, a gain of 0.87%, with the low-end of $10310/mt and the high-end of $10445.5/mt. Trading volume was 34,000 lots, and open interest stood at 338,000 lots. The most active SHFE 2407 copper contract prices opened at 82720 yuan/mt and finished at 83060 yuan/mt overnight, up 0.89%, with the low-end of 82410 yuan/mt and the high-end of 83150 yuan/mt. Trading volume was 57,000 lots and open interest stood at 215,000 lots. On the macro level, the CME short squeeze concern has not yet dissipated. Some short positions cannot deliver in time, resulting in an influx of longs, stimulating prices to rise further. Domestically, China and Russia will jointly promote the implementation of large-scale energy projects by Chinese and Russian enterprises. In terms of fundamentals, although refineries in the north have entered maintenance one after another and spot supply has decreased, it has not caused a supply shortage at present. It is expected that the maintenance will not change the current oversupply, and the supply in the spot market will remain relatively ample. In terms of consumption, downstream demand will increase after the delivery of the SHFE front-month contract, and replenishment will mainly be on demand. On Fundamentals, as of Thursday May 16, copper inventories across major Chinese markets stood at 410,400 mt, up 10,300 mt from Monday and 286,900 mt higher than the same period last year. Due to the influence of macro sentiment, copper prices will move strongly in the near future.