Low inventory versus just-in-time procurement, copper prices continue to drift higher [SMM Copper Morning Meeting Summary]

Friday, September 4, 2026
Futures: Overnight, LME copper opened at $14,236.5/mt, dipped to a low of $14,233/mt in early trading, then moved higher in a sideways pattern, reaching $14,362/mt near the close, and finally settled at $14,362/mt, up 0.88%. Trading volume reached 14,400 lots, and open interest stood at 265,000 lots, down 3,627 lots from the previous trading day, reflecting short covering. Overnight, the most-traded SHFE copper 2610 contract opened at 109,100 yuan/mt, rose in early trading to touch a high of 109,210 yuan/mt, then drifted lower to 108,930 yuan/mt, and subsequently consolidated in a narrow range before settling at 109,110 yuan/mt, up 0.53%. Trading volume reached 32,000 lots, up 743 lots from the previous trading day, reflecting long additions.
[SMM Copper Morning Meeting Summary] News:
(1) Adamera Minerals has identified a strong induced polarization (IP) anomaly at its South Hedley copper-gold property in British Columbia. The anomaly is at least 2.8 km wide and extends more than 325 meters at depth, indicating the presence of a large-scale sulphide system. The size and chargeability of the anomaly are comparable to nearby large copper-gold deposits, and rock samples show copper grades of up to 2,000 ppm. After exploration delays caused by wildfires, IP surveying has now resumed. The company plans to continue surveying, analyze samples, and expedite drilling permit applications to further explore the target area. This discovery highlights a highly prospective copper-gold porphyry exploration target within this prolific mining district.
Spot:
(1) Shanghai: On September 3, SMM #1 copper cathode spot prices against the SHFE copper 2609 contract were quoted at premiums of 170-360 yuan/mt, with an average of 265 yuan/mt, down 110 yuan/mt from the previous trading day. The SHFE copper 2609 contract showed a bottoming-out pattern after a gap-up open. In early trading, prices quickly climbed above 109,100 yuan/mt, then fluctuated higher, reaching an intraday high near 109,220 yuan/mt. Prices then retreated from highs, briefly dipping to around 108,950 yuan/mt, before gradually recovering. Near midday, prices rebounded to 109,170 yuan/mt. The backwardation spread between the current and next-month contracts ranged from 460 yuan/mt to 540 yuan/mt, and the import profit margin for SHFE copper against the 2609 contract stood at a loss of 600-480 yuan/mt. During the day, the sales sentiment for copper cathode in Shanghai was 3.26, down 0.15 MoM, and the procurement sentiment was 2.99, down 0.07 MoM. Historical data can be queried in the database. Looking ahead to today, SMM recorded social inventory in Shanghai at 55,500 mt, down 11,000 mt from Monday this week; social inventory in Jiangsu stood at 23,200 mt, up 3,200 mt, showing a clear divergence in inventory trends between the two east China regions. The rapid destocking in Shanghai was driven by two factors: on one hand, the simultaneous pullback in copper prices and spot premiums in the previous trading day prompted downstream dip-buying, leading to strong spot warehouse withdrawals; on the other hand, relatively limited arrivals replenished supply, further pushing Shanghai inventory lower. Jiangsu, by contrast, saw inventory buildup due to concentrated arrivals from some smelters. On the demand side, procurement picked up after yesterday's copper price pullback, but intraday buying enthusiasm has since cooled, with downstream buyers returning to just-in-time procurement and remaining limited in their acceptance of current premiums. Meanwhile, the elevated backwardation spread between the current and next-month contracts remains a key variable affecting spot premiums through supplier position rollovers and shipment pace. Overall, low inventory and limited arrivals in Shanghai provide some support for spot prices, but insufficient demand sustainability continues to cap premium upside. Spot prices against the SHFE copper 2609 contract are expected to remain rangebound today, with the center possibly edging slightly lower, though room for a sharp further decline is relatively limited. Going forward, close attention should be paid to changes in the backwardation structure between the current and next-month contracts.
(2) Guangdong: On September 3, spot #1 copper cathode in Guangdong against the front-month contract: high-quality copper was quoted at a premium of 320 yuan/mt, up 60 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 220 yuan/mt, up 40 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 160 yuan/mt, up 50 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 109,445 yuan/mt, up 780 yuan/mt from the previous trading day, and the average price of SX-EW copper was 109,335 yuan/mt, up 780 yuan/mt from the previous trading day. The procurement sentiment for copper cathode in Guangdong was 2.62, up 0.11 from the previous trading day, while the selling sentiment was 2.82, down 0.1 from the previous trading day (historical data can be accessed in the database). Overall, with inventories hitting new lows, spot premiums rose in response; attention should be paid to future arrivals, and premiums are expected to have further upside room.
(3) Imported copper: On September 3, the average warrant price fell $2/mt from the previous trading day to $74/mt (price range: $70-78/mt); the average B/L price rose $1/mt from the previous trading day to $75/mt (price range: $70-80/mt); the average price of EQ copper (CIF B/L) rose $15/mt from the previous trading day to $55/mt (price range: $50-60/mt), with quotes referencing cargoes arriving in September.
(4) Secondary copper: On September 3 at 11:30, the futures closing price was 109,170 yuan/mt, up 730 yuan/mt from the previous trading day. The average spot premium was 265 yuan/mt, down 110 yuan/mt WoW from the previous trading day. Today, secondary copper raw material prices rose 400 yuan/mt WoW. The selling sentiment index for secondary copper raw materials rose to 2.85, and the procurement sentiment index rose to 1.83. The price difference between copper cathode and copper scrap was 3,435 yuan/mt, up 106 yuan/mt WoW. The price difference between copper cathode rod and secondary copper rod was 1,610 yuan/mt. According to SMM survey, with copper prices stabilizing for the time being, secondary copper rod enterprises actively purchased copper scrap during the day amid bullish expectations for copper prices. Meanwhile, suppliers of copper scrap held a considerable amount of low-priced cargoes, and scrap utilization enterprises that could pay within 3-5 days were preferred by copper scrap traders seeking fast payment.
Prices: On the macro front, Oman rejected Iran's proposal for strait tolls, and Iran struck US military bases in the UAE and Kuwait, stating that the strait "lock" would not open without consent; Israel's defense minister threatened to strike Iran's infrastructure, with the Middle East conflict continuing to escalate. US initial jobless claims came in higher than expected, but the services PMI expanded strongly, showing economic resilience; Fed's Waller said he would consider a rate hike if August inflation exceeded expectations, while Vance argued for a rate cut. Market expectations for rate hikes shifted lower, and the US dollar index closed lower, supporting copper prices. On the fundamentals side, supply in Shanghai saw rapid inventory drawdowns with limited arrivals, and suppliers actively sold cargoes, keeping the overall supply tight. On the demand side, dip-buying was released to some extent but lacked sustainability, with buying returning to rigid demand during the day and limited acceptance of high-priced cargoes. On the inventory front, as of Thursday, September 3, SMM copper inventories in major Chinese regions fell 20,600 mt WoW to 88,900 mt, down 51,700 mt from 140,600 mt in the same period last year. Overall, copper prices are expected to maintain a fluctuating trend with an upward bias today.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients have no relation to SMM.]