Copper Prices Firm Up Amid Global Tensions, US Interest Rate Hikes

Copper prices closed higher both domestically and abroad, with support from stockpiling and destocking in futures. The London Metal Exchange (LME) copper price opened at $14,683.5/mt, moving up to a high of $14,774/mt before drifting lower to settle at $14,664.5/mt, a gain of 0.7%. Trading volume reached 21,700 lots, and open interest stood at 267,000 lots, up 2,264 lots from the previous trading day.

Meanwhile, the Shanghai Futures Exchange (SHFE) copper price gapped up to 111,380 yuan/mt at the open before consolidating in a narrow range and settling at 110,709 yuan/mt, up 0.67%. Trading volume reached 31,600 lots, and open interest stood at 148,000 lots, up 340 lots from the previous trading day.

On the macro front, US Fed officials sent hawkish signals, suggesting that rates would need to rise if inflation does not pull back. This, combined with tensions in the Middle East, may have contributed to a modest recovery in demand and a decline in inventories, supporting copper prices. Fundamentals showed available supply remaining tight during the day, with Shanghai inventories drawing down sharply and imported supply limited.

On the demand side, downstream pre-holiday stockpiling demand was released, purchasing sentiment rebounded notably, purchase willingness strengthened, and overall transactions performed well. Inventory levels, as of Monday, September 21, showed SMM copper inventories in mainstream regions across China fell 14,500 mt WoW to 74,800 mt, down 65,300 mt from the same period last year.