1.SMM Copper Morning Comment

LME copper prices opened at $8326/mt and closed at $8380/mt in last Friday evening trading, a rise of 0.82%, with the low-end of $8301.5/mt and the high-end of $8391.5/mt. Trading volume was 18,000 lots, and open interest stood at 277,000 lots. The most active SHFE 2403 copper contract prices opened at 68000 yuan/mt and closed at 67900 yuan/mt last Friday evening, up 0.4%, with the high-end of 68080 yuan/mt and the low-end of 67810 yuan/mt. Trading volumes stood at 20,000 lots and open interest stood at 149,000 lots. On the macro front, the one-year U.S. inflation rate in January is expected to be 2.9%. Interest rate swap contracts show that the Federal Reserve's expectations for an interest rate cut in March have further dropped to 40%. The hawkish speeches of Federal Reserve officials will also hit copper prices. On the fundamentals, as of January 19, SMM copper inventories in major Chinese markets decreased 2,300 mt to 75,400 mt from last Monday, up 3,400 mt from the two Fridays ago. In terms of consumption, the downstream buyers replenished cargoes at lows in the off-season. It is expected that the downstream will gradually start pre-holiday stockpiling this week, and the oversupply situation may improve. The premium will rise slightly. The copper prices will meet resistance due to depressed expectations over Fed rate cuts.

2. SMM Copper Morning Comment: U.S. retail sales data exceeds expectations, copper prices fall overnight

LME copper prices opened at $8326.5/mt and closed at $8283.5/mt in overnight trading, a drop of 0.74%, with the low-end of $8260.5/mt and the high-end of $8343.5/mt. Trading volume was 25,000 lots, and open interest stood at 276,000 lots. The most active SHFE 2403 copper contract prices opened at 67820 yuan/mt and closed at 67620 yuan/mt last evening, down 0.46%, with the high-end of 68160 yuan/mt and the low-end of 67590 yuan/mt. Trading volumes stood at 20,000 lots and open interest stood at 149,000 lots. On the macro front, U.S. retail sales data in December exceeded expectations by 0.6%. Swap contracts showed that the probability of the Federal Reserve cutting interest rates in March dropped to about 50%. The market began to accept the prospect of delaying interest rate cuts. The U.S. index rose, weighed on copper prices. In terms of fundamentals, from the supply side, imported copper has gradually flowed into the domestic trade market in East China in the past two days, and warehouse receipts have also been released. The spot market has relatively abundant supply of goods. In terms of consumption, the copper prices continue to decline, and downstream processing companies are still afraid of price falling. Only some small factories are still enthusiastic about purchasing. If copper prices can remain stable, demand is expected to increase. In terms of price, it is expected that copper prices will continue to be under pressure from the US dollar.

3.SMM Copper Morning Comment: Copper prices fell overnight, market waited for more data guidance

LME copper prices opened at $8324.5/mt overnight before reaching a low of $8324.5/mt and a high of $8393/mt, and closed at $8384/mt, a rise of 1.07%. Trading volumes were 17,000 lots and open interest stood at 280,000 lots. The most active SHFE 2403 copper contract prices opened at 67700 yuan/mt and finished at 67970 yuan/mt overnight, up 0.21%, with the low-end of 67700 yuan/mt and the high-end of 68010 yuan/mt. Trading volume was 17,000 lots and open interest stood at 143,000 lots. On the macro side, yesterday the domestic central bank conducted a 1-year MLF operation of 995 billion yuan, and the winning interest rate was 2.50%, which caused some concern in the market. Coupled with the strong performance of the US dollar, copper prices fell. However, there was not much macro information last night, and copper prices experienced a certain correction, waiting for more information and guidance. In terms of fundamentals, as of Monday January 15, SMM social inventory across major Chinese markets increased by 5,700 mt to 77,700 mt from last Friday. There are two main reasons for the accumulation of inventory in East China. Many delivery warehouse receipts were put into storage last weekend, and supply from the north moved to the south, causing a slight increase in inventory. However, inventory in South China remained low with no significant changes. From the supply side, imported copper this week will decrease compared with last week, but supply from the north continues to go southward. Meanwhile, inventory has increased. It is expected that the supply of electrolytic copper will not be tight. In terms of consumption, copper prices continue to fall, and we are paying attention to whether the market will stock up before the Chinese New Year holiday. There will be limited upside room for copper prices as the US dollar weighed.

4.SMM copper morning comment: Copper prices under pressure as dollar rose after Fed officials said they will not cut interest rates quickly

LME copper prices opened at $8373.5/mt and closed at $8345/mt in overnight trading, a decline of 0.47%, with the low-end of $8330/mt and the high-end of $8363/mt. Trading volume was 19,000 lots, and open interest stood at 279,000 lots. The most active SHFE 2403 copper contract prices opened at 68020 yuan/mt and finished at 68010 yuan/mt last evening, up 0.29%, with the low-end of 67900 yuan/mt and the high-end of 68160 yuan/mt. Trading volume was 23,000 lots, and open interest stood at 145,000 lots. On the macro front, Fed Governor Waller said that interest rate cuts should be carried out in a cautious and orderly manner, and there is no reason to cut interest rates as quickly as in the past. Market expectations for rapid interest rate cuts in the United States were hit, and the U.S. index rose, suppressing copper prices. We need to pay attention to the upcoming U.S. economic Beige Book and official speeches, which will have an impact on market expectations for interest rate cuts. In terms of fundamentals, from the supply side, domestic inventories are currently accumulating, and warehouse receipts will gradually flow into the market. Copper supply is expected to be relatively loose this week. In terms of consumption, the downstream has optimistic expectations for the inflow of imported copper and the release of warehouse receipts in the future. As the consumption of its own inventory slows, downstream procurement has slowed down. If copper prices continue to decline, downstream procurement demand will increase to a certain extent. Otherwise, demand is expected to weaken. It is understood that processing companies will start pre-holiday stocking next week. The strong US dollar will weigh on copper prices.

5.Yangshan copper premiums still face pressure

Yangshan copper premiums with a quotation period in February stood at $53-63/mt under bill of lading during January 8-11, with the weekly average down $3.5/mt from a week earlier. Those stood between $55-70/mt under warrants with a quotation period in January, with the weekly average down $2.5/mt. Import premiums for EQ copper with a quotation period in February stood at $4-10/mt, cif, with the weekly average up $2.5/mt. As of 15:00 CST January 11, the SHFE/LME copper price ratio stood at 8.1, and import profit stood at around 158.77 yuan/mt.

The SHFE/LME copper price ratio recovered during the week. The import profit relative to the SHFE January copper contract exceeded 600 yuan/mt. However, the import profit against the February contract was only around 160 yuan/mt. Due to the rally of the SHFE/LME copper price ratio, cargoes under bill of lading arriving soon were desirable, thus bolstering import premiums. Buyers refrained from purchasing cargoes slated to arrive from the end of January to the beginning of February due to high costs arising from storage fees, box fees and capital costs during CNY holidays. Trades were tepid. In terms of warehouse warrants, offers rose amid improved SHFE/LME copper price ratio, but the actual traded import premiums were not high. Warrants for immediate delivery were limited amid low domestic social and bonded inventory. Most of the warrants being offered for sale were scheduled for delivery after the delivery of the SHFE front-month contract. Import premiums for high-quality pyro-copper stood at around $68/mt under warehouse warrants as of Thursday, and $61/mt for mainstream pyro-copper. Those for hydro-copper stood at $55/mt.

On the B/L front, premiums stood at $65/mt for high-quality copper, $58/mt for mainstream pyro-copper, and $52/mt for hydro-copper. Import premiums for EQ copper stood at $5-11/mt, cif, and averaged $8/mt.