LME copper prices opened at $8340/mt overnight before reaching a low of $8326/mt and a high of $8454/mt, and closed at $8447.5/mt, a rise of 1.67%. Trading volumes were 27,000 lots and open interest stood at 261,000 lots. The most active SHFE 2312 copper contract prices opened at 68010 yuan/mt and finished at 68460 yuan/mt overnight, up 0.82%, with the low-end of 67880 yuan/mt and the high-end of 68460 yuan/mt. Trading volume was 26,000 lots and open interest stood at 125,000 lots.

On the macro front, Federal Reserve Vice Chairman Barr said that the Federal Reserve may be close to or reaching the peak interest rate. The US dollar fell, which was bullish for copper prices. In addition, SWIFT data shows that the yuan achieved a record increase in global payment share in September, with its share rising from 3.9% at the beginning of the year to 5.8%, surpassing the euro's share for the first time. On Fundamentals, as of Monday November 20, SMM copper inventories across major Chinese markets stood at 55,300 mt, up 5,500 mt from last Friday and 66,400 mt lower than the same period last year. The arrivals of imported copper in East China has increased and the spot premiums are high, thus the downstream delivery-taking has slowed down, causing the inventory to increase; in South China, due to the increase in shipments last weekend, and as some downstream companies have reduced production due to high prices, inventories have also seen an increase. In terms of consumption, downstream demand declined due to high spot premiums. In terms of price, the continued decline of the US dollar has helped copper prices rebound, but the space is limited.

 

 

 

 

 

 

 

2. Copper inventories across major Chinese markets rose slightly

As of Monday November 20, SMM copper inventories across major Chinese markets stood at 55,300 mt, up 5,500 mt from last Friday and 66,400 mt lower than the same period last year. The arrivals of imported copper in East China has increased and the spot premiums are high, thus the downstream delivery-taking has slowed down, causing the inventory to increase; in South China, due to the increase in shipments last weekend, and as some downstream companies have reduced production due to high prices, inventories have also seen an increase.

Looking into this week, the inflow of imported copper may increase slightly, while arrivals of domestic copper may not change much.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.SMM Morning Comment For SHFE Base Metals November 21

Copper
LME copper prices opened at $8340/mt overnight before reaching a low of $8326/mt and a high of $8454/mt, and closed at $8447.5/mt, a rise of 1.67%. Trading volumes were 27,000 lots and open interest stood at 261,000 lots. The most active SHFE 2312 copper contract prices opened at 68010 yuan/mt and finished at 68460 yuan/mt overnight, up 0.82%, with the low-end of 67880 yuan/mt and the high-end of 68460 yuan/mt. Trading volume was 26,000 lots and open interest stood at 125,000 lots. On the macro front, Federal Reserve Vice Chairman Barr said that the Federal Reserve may be close to or reaching the peak interest rate. The US dollar fell, which was bullish for copper prices. In addition, SWIFT data shows that the yuan achieved a record increase in global payment share in September, with its share rising from 3.9% at the beginning of the year to 5.8%, surpassing the euro's share for the first time. On Fundamentals, as of Monday November 20, SMM copper inventories across major Chinese markets stood at 55,300 mt, up 5,500 mt from last Friday and 66,400 mt lower than the same period last year. The arrivals of imported copper in East China has increased and the spot premiums are high, thus the downstream delivery-taking has slowed down, causing the inventory to increase; in South China, due to the increase in shipments last weekend, and as some downstream companies have reduced production due to high prices, inventories have also seen an increase. In terms of consumption, downstream demand declined due to high spot premiums. In terms of price, the continued decline of the US dollar has helped copper prices rebound, but the space is limited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.Rock-bottom RCs of blister copper in China

RCs of domestic blister copper in south China stood at 800-900 yuan/mt and averaged 850 yuan/mt in October 2023, a drop of 50 yuan/mt month on month. RCs of blister copper in north China stood at 900-1,100 yuan/mt and averaged 1,000 yuan/mt, down 50 yuan/mt. RCs of imported blister copper were quoted at $105-115/mt cif, and averaged $110/mt, down $5/mt.

If the price difference continues to recover, the supply of domestic copper scrap will increase, thereby growing the output of blister copper produced with copper scrap. This, combined with the recovery in imports, will gradually increase the overall supply of blister copper. The completion of maintenance of various domestic smelters and the commissioning and ramp-up of new and expansion projects will keep the demand for blister copper at high levels. Negotiations for long-term contracts are approaching. In aggregate, the overall blister copper supply will remain tight, but any downside room for RCs will be limited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.Support for copper prices from fundamentals to weaken in November as off-season sets in

The Federal Reserve paused interest rate hikes in November. The weak US employment data pointed to a cooling labour market. As such, the US dollar fell below the 105 mark again. However, the downbeat economic data in Europe grew the risk of economic recession, boosting the US dollar. And Fed officials still have reservations about the decision to raise interest rates in December, with markets focusing on US CPI data in November. The favourable macroeconomic environment in China is expected to provide support for copper contract prices. SMM predicts that copper consumption will weaken in the off-season of November, and the support for copper prices from fundamental will be weaker than in October. LME copper is expected to trade between $8,000-8,250/mt in November and SHFE copper prices will fluctuate between 66,500-68,000 yuan/mt.