The situation in the Middle East continues to ease, and risk appetite rebounds, boosting copper prices [SMM Copper Morning Comment]

SMM Morning Meeting Minutes: Overnight, LME copper opened at $13,746/mt, consolidated at highs in early trading, rose to $13,781.5/mt before its center moved lower, then dipped to a low of $13,704/mt, and finally moved sideways to close at $13,759.5/mt, up 1.09%. Trading volume reached 16,000 lots, open interest at 244,000 lots, down 1,039 lots from the previous trading day, reflecting bearish position reduction. Overnight, the most-traded SHFE copper 2609 contract opened at 105,500 yuan/mt, rose to a high of 105,640 yuan/mt in early trading, before its center shifted lower to touch a low of 105,060 yuan/mt. Its center then moved sideways, eventually closing at 105,280 yuan/mt, down 0.31%. Trading volume was 34,000 lots, open interest at 206,000 lots, down 26.83 million lots from the previous trading day, also reflecting bearish position reduction.

Zambia’s mining sector is embarking on a significant expansion phase as major international producers scale up capital expenditure to align with government ambitions of increasing national copper output toward 1 million MT per year. However, according to foreign media reports, industry analysts warn that the country's long-term production targets depend heavily on whether supporting grid and transport infrastructure can expand alongside mine capacity. The primary operational constraint remains electricity availability across the Copperbelt. With over 83% of Zambia's 3,985 MW national power base dependent on hydropower assets like Kafue Gorge and Kariba North, recent drought-driven water level drops have exposed severe energy vulnerabilities across the mining sector. Unscheduled grid fluctuations and emergency load-shedding pose acute operational risks to energy-intensive processing operations, where power interruptions cause severe thermal shock to copper smelter brick linings, resulting in physical equipment damage and prolonged operational shutdowns. To mitigate these disruptions, mining companies are increasingly investing in off-grid renewable energy projects, utility-scale solar PV capacity, and regional power imports. Beyond energy, sustained production growth will require capital investments in rail logistics networks, water infrastructure, and local supplier technical capacity.

As Zambia prepares for its general elections, international investors and metals analysts are focusing on whether macroeconomic policy continuity can translate into tangible mining growth, according to foreign media reports. Primary market attention is centered on foreign direct investment execution, power sector reliability, and structural economic reforms necessary to support long-term production targets. As the backbone of the national economy, generating 70% of export earnings and over 10% of GDP, the copper sector remains the primary benchmark for institutional investors. Market participants are closely tracking whether project pipelines, including First Quantum's ongoing expansions, continued investment from Barrick, and the return of Vedanta, can deliver actual production gains toward the long-term goal of tripling national copper output from roughly 1 million tons. While the government has pledged to keep mining royalty rates stable, foreign operators face potential supply-chain adjustments under a local-content framework requiring miners to scale domestic procurement from 20% toward 40% over three to four years. Because domestic suppliers often lack the required capital and technical capacity, foreign operators could face operational bottlenecks or enforcement uncertainty. Furthermore, expanding production hinges on resolving hydro-dependent power grid vulnerabilities through solar investment and grid reforms following severe drought-related load-shedding. Investors are also watching negotiations for a successor IMF program after the prior $1.7 billion facility ended in January, alongside fiscal deficit risks linked to state maize buffer-stock purchases.