US-Iran Conflict Continues to Escalate, but Inventory Destocking Offers Support; Both LME and SHFE Copper Closed Slightly Lower Overnight [SMM Copper Morning Meeting Summary]

Friday, July 17, 2026
Futures: Overnight, LME copper opened at $13,615/mt, rose to touch $13,630/mt in early trading, then drifted lower to $13,533/mt, and finally closed at $13,543.5/mt, down 0.28%. Trading volume totaled 12,000 lots, and open interest stood at 242,000 lots, down 2,906 lots from the previous trading day, indicating long liquidation. Overnight, the most-traded SHFE copper 2608 contract opened at 104,200 yuan/mt, edged up to 104,550 yuan/mt in early trading, then drifted lower to touch 104,100 yuan/mt, and finally closed at 104,230 yuan/mt, down 0.2%. Trading volume reached 13,000 lots, and open interest stood at 132,000 lots, down 1,191 lots from the previous trading day, indicating long liquidation.
[SMM Copper Morning Briefing] News:
(1) According to the International Energy Agency (IEA), copper mines accounting for more than one-seventh of global primary copper supply are now at the mercy of a sulphuric acid market thrown into turmoil by Middle East conflict and export bans from Beijing. The agency warned that while the long-term supply outlook for copper has improved slightly, the metal still faces “a broad range of severe near-term challenges.” In its newly released “Global Critical Minerals Outlook 2026,” the Paris-based agency noted that the short-term and medium-term outlook for the copper market has deteriorated significantly over the past year: “Though the long-term supply picture has improved modestly, the short- and medium-term supply outlook appears markedly worse. Constraints on sulphuric acid availability pose a major risk to solvent extraction-electrodeposition (SxEW) production. Together with slower-than-expected recovery from major mine disruptions and an already tight market, copper is facing a broad range of severe near-term challenges.”
Spot:
(1) Shanghai: On the morning of July 16, the SHFE copper 2608 contract trended lower, then stabilized and rebounded. The contract opened at 104,200 yuan/mt, and prices edged slightly lower after opening, touching a session low of 103,980 yuan/mt during the day. After stabilizing, prices began to gradually recover, touching a session high of 104,460 yuan/mt before closing at 104,450 yuan/mt. The backwardation spread between the two nearest contracts ranged from 60 yuan/mt to 110 yuan/mt, and SHFE copper’s import profit margin against the 2608 contract stood between losses of 240 yuan/mt and losses of 180 yuan/mt. Looking ahead to today, social inventory continues to destock rapidly. SMM data shows Shanghai social inventory at 76,500 mt, down 9,100 mt WoW; Jiangsu social inventory stood at 19,500 mt, down 6,900 mt WoW. Available spot cargoes remained tight. Supplier behavior suggests that after low-priced cargoes were quickly absorbed, discounted cargoes were hard to find in the market, and suppliers showed firm intent to hold prices firm, with premiums for high-quality copper holding firm at elevated levels of 360-400 yuan/mt. Although the backwardation spread narrowed after contract rollover, it remained at a relatively high level. Overall, with inventory continuing to destock and limited arrivals to replenish supply, spot prices against the SHFE copper 2608 contract are expected to maintain premiums today, with the overall center likely to edge slightly higher.
(2) Guangdong: On July 16, Guangdong #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 180 yuan/mt, up 100 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 100 yuan/mt, up 120 yuan/mt; and SX-EW copper was quoted at a premium of 40 yuan/mt, up 120 yuan/mt. The average price of Guangdong #1 copper cathode was 104,180 yuan/mt, down 1,025 yuan/mt from the previous trading day, while the average SX-EW copper price was 104,080 yuan/mt, down 1,015 yuan/mt. Overall, after the contract rollover, copper prices pulled back sharply, downstream purchases increased, and overall trading improved.
(3) Imported copper: On July 16, the average warrant premium rose $5/mt from the previous trading day to $95/mt (price range: $90-100/mt); the average B/L premium rose $6/mt to $95/mt (price range: $90-100/mt); and the average EQ copper (CIF B/L) premium rose $3/mt to $60/mt (price range: $57-63/mt). Quotes reference cargoes arriving from mid-to-late July to mid-to-late August.
(4) Secondary copper: On July 16 at 11:30, the futures closing price was 104,450 yuan/mt, down 570 yuan/mt from the previous trading day. The average spot premium was 350 yuan/mt, up 350 yuan/mt from the previous trading day. On July 16, copper scrap prices fell 400 yuan/mt from the previous trading day. The sales sentiment index for copper scrap fell to 2.48, and the purchase sentiment index fell to 2.29. The price difference between copper cathode and copper scrap was 3,923 yuan/mt, up 747 yuan/mt from the previous trading day. The price difference between copper cathode rod and secondary copper rod was 950 yuan/mt. According to SMM survey, copper prices consolidated, copper scrap holders held back from selling, while secondary copper rod enterprises believed copper prices still had downside room, leading to moderate purchase willingness. Intraday, the copper scrap market saw weak supply and demand.
Prices: On the macro front, the US-Iran conflict continued to escalate. Iran claimed that the Strait of Hormuz would not open under US pressure, and the Revolutionary Guards warned that if the US military makes strategic mistakes, regional energy exports would face disruption. Reports indicated that Iran had secretly ordered the Houthis to blockade the Bab el-Mandeb Strait if the US strikes Iranian power facilities. Meanwhile, the US military carried out airstrikes on airports and transport hubs inside Iran. The White House said Iran remains open to dialogue, but Iran’s stance has not softened. Overall, although Middle East tensions remained high, market expectations for US economic resilience dominated short-term sentiment, causing copper prices to edge down. On the fundamentals side, supply remained tight with insufficient imports and domestic production to fill the gap. Demand was sluggish, and downstream only made essential restocking during the off-season. As of Thursday, July 16, SMM copper inventories in major Chinese regions fell 41,600 mt WoW to 123,400 mt, and total inventories declined 19,900 mt YoY from 143,300 mt. Overall, copper prices are expected to drift lower with small fluctuations today.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and not use this as a replacement for their own independent judgment. Any decisions made by the client are not related to SMM.]