US-Iran Geopolitical Disturbances Combined with Continued Destocking in China Drive Copper Prices Higher Both Domestically and Internationally [SMM Copper Morning Comment]

SMM July 21 – Overnight, LME copper opened at $13,604/mt, swung wildly at the start and touched a low of $13,590/mt, then continued wild swings and near the close climbed to $13,645/mt, finally settling at $13,644.5/mt, up 0.86%. Trading volume reached 15,600 lots, and open interest stood at 244,000 lots, down 1,039 lots from the previous trading day, indicating short position reduction. Overnight, the most-traded SHFE copper 2609 contract opened at 104,490 yuan/mt, dipped to 104,240 yuan/mt shortly after opening, then drifted higher to touch a high of 104,680 yuan/mt, and later moved sideways. It eventually closed at 104,480 yuan/mt, up 0.69%. Trading volume reached 33,800 lots, and open interest stood at 192,000 lots, up 1,706 lots from the previous trading day, indicating long position addition. On the macro front, Iran said mediators proposed a 10-day US-Iran ceasefire to resume implementation of the memorandum of understanding, and it has received the proposal and indicated it may negotiate with the US based on national interests. The Houthis announced a maritime ban against Saudi Arabia, and Saudi Arabia said it is taking military action to ensure shipping safety in the Bab el-Mandeb Strait. US media reported that Trump is focused on making Iran "pay a price," but negotiations between the two countries continue. On the fundamentals side, supply side, available spot resources in China remained acutely tight, social inventory stayed at a low for the year, arrivals from cross-regional transfers were limited, and the tight spot situation is unlikely to ease in the short term. Demand side, the industry was in the traditional consumption off-season, downstream enterprises made sporadic need-to-basis purchases, and overall consumption was weak. Inventory side, as of Monday July 20, SMM copper inventories in major Chinese regions fell by 32,700 mt WoW to 107,300 mt. Continued destocking provided bottom support for copper prices. Overall, the tight supply and destocking trend continued, and copper prices are expected to drift higher today.