Unclear prospects for U.S. tariff trade, copper prices fluctuate at highs with balanced long and short positions [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,608.0/mt. It fluctuated in the early session, reaching a high of $9,622.0/mt during the oscillation, before pulling back to a low of $9,557.0/mt. It then oscillated and eventually closed at $9,567.0/mt, up 0.01%. Trading volume was 13,343 lots, and open interest was 295,433 lots. Overnight, the SHFE copper 2507 contract opened at 78,080 yuan/mt. It fluctuated in the early session, reaching a high of 78,100 yuan/mt during the session, before fluctuating downward to a low of 77,750 yuan/mt. It eventually closed at 77,850 yuan/mt, down 0.18%. Trading volume was 30,719 lots, and open interest was 171,728 lots.
[SMM Copper Morning Meeting Summary] News: (1) On May 28 (Wednesday), Kazakh metal producer KAZ Minerals stated in a release that its copper production in the first quarter of this year was 90,400 mt, a 4.1% decrease from the same period last year. The company attributed the decline in Q1 copper production to lower ore grades, but its Q1 copper production was still slightly higher than the 92,900 mt in Q4 2024.
Spot: (1) Shanghai: On May 29, SMM #1 copper cathode spot prices were quoted at a premium of 90-210 yuan/mt against the front-month 2506 contract, with an average premium of 150 yuan/mt, unchanged from the previous trading day. The SMM #1 copper cathode price was 78,380-78,590 yuan/mt. SHFE copper jumped initially and then pulled back in the morning session, reaching a high of 78,390 yuan/mt before falling to around 78,280 yuan/mt. The backwardation between the front-month and next-month contracts continued to hover around 300 yuan/mt, and the SHFE/LME price ratio continued to weaken. Tomorrow is the last trading day of May, and companies are generally entering the process of closing accounts and settling transactions. It is expected that the number of suppliers will decrease, and purchasing demand will also decline somewhat. Small enterprises may still be stockpiling for the Dragon Boat Festival. It is expected that the premium price will stabilize and slightly increase tomorrow.
(2) Guangdong: On May 29, Guangdong #1 copper cathode spot prices were quoted at a premium of 30-100 yuan/mt against the front-month contract, with an average premium of 65 yuan/mt, down 55 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 30-10 yuan/mt, with an average discount of 20 yuan/mt, down 50 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 78,365 yuan/mt, down 150 yuan/mt from the previous trading day, and the average price of SX-EW copper was 78,280 yuan/mt, down 145 yuan/mt from the previous trading day. Overall, downstream restocking enthusiasm was low before the holiday. Suppliers continuously lowered prices to facilitate sales, and overall trading activity was moderate.
(3) Imported copper: On May 29, warrant prices were $82-96/mt, with a QP of June, and the average price was unchanged from the previous trading day. B/L prices were $90-120/mt, with a QP of June, and the average price fell by $1/mt from the previous trading day. EQ copper (CIF B/L) prices were $60-74/mt, with a QP of June, and the average price fell by $3/mt from the previous trading day. Quotations were based on cargoes expected to arrive in early June. Overall, market transactions weakened. Inventories in bonded areas continued to decline this week, but the rate of decline slowed marginally. It is expected that there is still downside room for the premium of imported copper, but supply will remain tight in May-June, providing strong support at the bottom.
(4) Secondary copper: On May 29, the price of secondary copper raw materials remained unchanged MoM. The price of bare bright copper in Guangdong was 72,700-72,900 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 953 yuan/mt, up 10 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,130 yuan/mt. According to the SMM survey, secondary copper rod enterprises showed weak willingness to stockpile raw materials before the holiday. Due to insufficient orders on hand, the supply of secondary copper raw materials in the market was moderate. The conventional raw material inventory of secondary copper rod enterprises could ensure normal production during the holiday, so they were not in a hurry to purchase excessive amounts of secondary copper raw materials.
(5) Inventory: On May 29, LME copper cathode inventory decreased by 1,925 mt to 152,375 mt. On the same day, SHFE warrant inventory decreased by 2,696 mt to 32,165 mt.
Price: On the macro front, the US Court of Appeals allowed Trump's tariff policy to remain temporarily in effect, after the US Court of International Trade halted the "Emancipation Day" tariff policy. Officials under Trump expressed strong confidence in winning the lawsuit and believed that even if they lost, they could find alternative ways to impose tariffs. Meanwhile, tariff negotiations would continue, with three agreements expected in the coming weeks. US Treasury Secretary: There has been no change in the attitude of trading partners in the past 48 hours. With an uncertain trade outlook, copper prices fluctuated at highs. On the fundamental front, on the last trading day of May, overall pre-holiday stockpiling was low. It is expected that both supply and demand will be weak today. As of Thursday, May 29, SMM copper inventories in major regions across China decreased by 1,000 mt from Monday to 138,700 mt, continuing to show destocking. In major consumption regions, Shanghai, Guangdong, and Jiangsu all showed destocking, with Shanghai experiencing the largest destocking of 1,100 mt. Overall, with an uncertain trade outlook but optimistic officials under Trump, it is expected that copper prices will fluctuate at highs today, with slight pressure on the upside.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and should not rely on this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.]