SMM Copper Morning Briefing | Tue. Oct 13, 2026

SMM, Oct 13: Overnight, LME copper closed up 0.49%, driven by long positioning; SHFE copper closed up 0.11%, driven by short covering. On the macro front, an attack on an Iranian oil tanker in the Strait of Hormuz heightened Middle East shipping risks. Combined with hawkish remarks from US Fed official Hammack and rising crude oil prices, copper prices shot up overnight before pulling back. Copper prices are expected to consolidate on a strong note today.

1. Overnight Futures

LME copper: Opened at $14,678.5/mt, hit a high of $14,686/mt, a low of $14,605/mt, and closed at $14,621.5/mt, up 0.49%. Trading volume was 14,700 lots, and open interest was 261,000 lots, up 1,029 lots from the previous trading day, driven by long positioning.

Most-traded SHFE copper 2611 contract: Opened at 111,270 yuan/mt, hit a high of 111,340 yuan/mt, a low of 110,820 yuan/mt, and closed at 110,890 yuan/mt, up 0.11%. Trading volume was 21,000 lots, and open interest was 195,000 lots, down 418 lots from the previous trading day, driven by short covering.

2. News

(1) US Fed official Beth Hammack said that to prevent high inflation from becoming entrenched in the economy, the US Fed should consider making smaller, more frequent rate adjustments rather than waiting for inflationary pressures to build before taking larger actions. She believes US inflation pressures are no longer confined to energy prices, with tariff hikes and demand from AI infrastructure construction also pushing up costs, making it necessary to maintain restrictive monetary policy for now.

(2) The Ministry of Finance and the State Taxation Administration announced: 1. Effective Apr 1, 2027, the VAT export rebate rate for NEVs will be reduced from 13% to 9%. 2. Effective Apr 1, 2027, VAT export rebates will be cancelled for products such as e-cigarette devices and components. 3. For products subject to consumption tax among the above, export consumption tax policies remain unchanged, and consumption tax rebate (exemption) policies continue to apply. 4. The export rebate rate applicable to products listed in this announcement shall be determined by the export date indicated on the export goods declaration form. 3. Spot Market

3. Spot Market

1) Shanghai

Electrolytic copper sales sentiment was 3.5, up 0.12 MoM, while purchasing sentiment was 2.85, down 0.07 MoM.

On Oct 12, SMM #1 copper cathode spot prices against the SHFE copper 2610 contract were quoted at a premium of 80-240 yuan/mt, with an average premium of 160 yuan/mt, down 380 yuan/mt from the previous trading day. Looking ahead to today, SMM recorded social inventory in Shanghai at 66,500 mt, up 11,800 mt WoW from last Thursday, mainly due to concentrated arrivals of imported copper. Social inventory in Jiangsu was recorded at 19,800 mt, down 2,600 mt WoW, mainly due to fewer domestic cargo arrivals combined with normal downstream cargo pick-up and warehouse withdrawals. With the significant replenishment of imported supply in the Shanghai region, the tightness of available supply in the market has further eased. Overall, with increased imported supply, active selling by suppliers, and pressure from the wide price spread between futures contracts, spot premiums in the Shanghai region are expected to remain under pressure tomorrow, likely holding at slight premiums and continuing to pull back slightly.

2) Guangdong

Procurement sentiment was 2.73, up 0.1 from the previous trading day, while selling sentiment was 2.99, up 0.03 from the previous trading day.

On October 12, Guangdong #1 copper cathode spot prices against the front-month contract:

High-quality copper was quoted at a premium of 350 yuan/mt, down 250 yuan/mt from the previous trading day;

Standard-quality copper was quoted at a premium of 50 yuan/mt, down 250 yuan/mt from the previous trading day;

SX-EW copper was quoted at a discount of 10 yuan/mt, down 250 yuan/mt from the previous trading day.

After the weekend, Guangdong inventory declined again, mainly due to reduced arrivals and increased warehouse withdrawals. With delivery approaching but the price spread between futures contracts still very wide, and copper prices rising notably today, suppliers had to lower prices to sell, while downstream users only slightly increased procurement volumes.

Overall, with delivery approaching and the price spread between futures contracts still wide, suppliers actively cut prices to sell, spot premiums fell notably, and transactions today were only slightly better than last Friday.

3) Imported copper

October 12: Average warrant price was $130/mt, down $5/mt from the previous trading day, with a price range of $120-140/mt;

Average B/L price was $125/mt, down $5/mt from the previous trading day, with a price range of $120-130/mt;

Average EQ copper (CIF B/L) price was $61/mt, down $1/mt from the previous trading day, with a price range of $54-68/mt.

Quotes were based on cargoes arriving in October. The SHFE/LME price ratio weakened yesterday, downstream demand showed mediocre performance, and domestic spot premiums fell, leaving imported copper spot premiums lacking upward momentum. Early trading was sluggish, and under the current futures structure, the market holds expectations for premiums to pull back going forward.

4) Secondary copper

At 11:30 on October 12, futures closing price was 111,740 yuan/mt, up 830 yuan/mt from the previous trading day; average spot premiums were 160 yuan/mt, down 380 yuan/mt MoM from the previous trading day.

Copper scrap prices rose 500 yuan/mt MoM; the selling sentiment index rose to 2.54, and the procurement sentiment index rose to 2.12;

The price difference between copper cathode and copper scrap was 3,854 yuan/mt, down 125 yuan/mt MoM; the price difference between copper cathode rod and secondary copper rod was 1,215 yuan/mt. According to SMM survey, copper prices retreated after a rapid rise. Secondary copper rod enterprises hold low raw material inventories, and copper scrap traders are actively willing to sell at current high copper prices. Secondary copper rod enterprises reported that procurement was relatively easy during the day. However, due to elevated prices, secondary copper rod enterprises faced higher capital costs, limiting their procurement volumes.

IV. Inventory (October 12)

Social inventory in Shanghai stood at 54,700 mt, up 5,500 mt from before the holiday; social inventory in Jiangsu stood at 22,400 mt, up 9,700 mt from before the holiday.

V. Price Outlook

Macro:

Iran's Revolutionary Guard said a supertanker was attacked in the Strait of Hormuz early Monday, reigniting Middle East shipping risks; foreign media reported the US sought to "soften" Russia's stance through a diesel agreement, but Putin insisted on fully capturing Donbas. US Fed's Hammack indicated further rate hikes remain possible, with timing undecided, favoring "smaller, more frequent" adjustments. Driven by rising crude oil prices, overnight copper prices shot up before retreating.

Fundamentals:

Demand side: Concentrated arrivals of imported copper increased Shanghai inventories, easing the tightness of available supply, while suppliers showed strong willingness to sell.

Demand side: High copper prices and wide price spreads between futures contracts suppressed procurement, with downstream buyers focusing on essential needs and showing limited willingness to chase higher prices, resulting in weak demand. Inventory: As of Monday, October 12, SMM copper inventories in major domestic regions rose 34,000 mt WoW to above 100,000 mt, while total inventories were down 64,300 mt from around 170,000 mt in the same period last year.

The information provided is for reference only and does not constitute direct investment research or decision-making advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.