SMM Copper Morning Briefing | Thursday, October 15, 2026

Overnight, both LME copper and SHFE copper closed lower, driven by increased short positions in LME copper and reduced long positions in SHFE copper. US inflation data came in above expectations, compounded by elevated oil prices and geopolitical disruptions in the Middle East, leaving copper prices encountering resistance. Copper prices are expected to consolidate on a subdued note within a narrow range today.

1. Overnight Futures

LME copper:

Opened at $14,611.5/mt, hit a high of $14,700/mt, a low of $14,425/mt, and closed at $14,436/mt, down 0.82%. Trading volume was 21,000 lots, with open interest at 265,000 lots, up 816 lots from the previous trading day, reflecting increased short positions.

Most-traded SHFE copper 2611 contract:

Opened at 110,780 yuan/mt, hit a high of 110,800 yuan/mt, a low of 109,900 yuan/mt, and closed at 110,110 yuan/mt, down 0.81%. Trading volume was 41,400 lots, with open interest at 195,000 lots, down 2,076 lots from the previous trading day, reflecting reduced long positions.

2. News

On Tuesday, October 14, the supervisors' union at BHP's Escondida copper mine in Chile met with company representatives on Tuesday evening in a final effort to avert a strike. Earlier that day, the union announced it would begin a strike on Wednesday after mediation efforts aimed at finalising a new collective labor contract failed.

The union said it had been summoned by the government's mediation arrangement to meet with the company again and would update its members on the progress of negotiations. As the world's largest copper mine, the prospect of a potential strike at Escondida has been supporting copper prices, as any production halt would tighten global supply.

The supervisors' union and Escondida have been engaged in tense contract negotiations for weeks, with the union threatening to strike if talks failed. Earlier on Tuesday, the union said it had put forward a proposal incorporating 90% of the company's offer along with the union's key demands, including pay raises and production bonuses.

The union said the company was asking workers to give up important benefits and insisted on sharing personal biometric data with third parties. Escondida, located in the Atacama Desert in northern Chile, is majority-owned and operated by BHP, with Rio Tinto holding a 30% stake and Japan's JECO holding 12.5%.

3. Spot Market

1) Shanghai

Purchasing sentiment was 2.77, down 0.14 MoM; sales sentiment was 3.07, down 0.50 MoM.

On October 14, SMM #1 copper cathode spot prices against the SHFE copper 2610 contract were quoted at a discount of 120 yuan/mt to a premium of 200 yuan/mt, with an average of a discount of 50 yuan/mt, down 70 yuan/mt from the previous trading day.

In early trading, the SHFE copper 2610 contract opened higher with a gap, then initially fell before rebounding, retreating after a rapid rise during the session. It opened around 111,450 yuan/mt, briefly rose to around 111,550 yuan/mt, then drifted lower, hitting an intraday low near 111,350 yuan/mt.

After that, copper prices gradually rebounded, and after breaking above 111,600 yuan/mt, gains widened. Prices touched an intraday high near 112,000 yuan/mt, then pulled back quickly from highs, with the morning session closing at 111,750 yuan/mt.

The backwardation between the two front-month contracts stood at 480-690 yuan/mt; the import profit margin for SHFE copper against the 2610 front-month contract was at a loss of 1,090-730 yuan/mt.

Today is the last trading day for the SHFE copper 2610 contract. Since SMM spot quotes are still based on the front-month contract, as delivery and contract rollover approach, changes in the price spread between the 2610 and 2611 contracts will directly affect spot premiums.

Intraday, the backwardation between the two front-month contracts has narrowed significantly from earlier highs. If the price spread between futures contracts pulls back further, after conversion based on the spread structure, spot premiums against the 2610 contract are expected to remain near parity today, with a possibility of a slight rebound. Some suppliers have already started quoting against the 2611 contract, with non-registered copper quoted at a premium of around 400 yuan/mt against the 2611 contract.

On the supply-demand front, arrivals of domestic cargoes have remained relatively limited recently, while downstream processing enterprises are also mainly purchasing on a need-to basis. The overall market is showing a pattern of weak supply and demand. Considering that today marks a key delivery period, spot market trading is expected to focus more on price spreads between futures contracts and post-rollover quotes. Close attention should be paid to rapid changes in open interest for the 2610 contract, warrants, and the backwardation between the two front-month contracts.

2) Guangdong

Purchasing sentiment was 2.41, down 0.12 from the previous trading day; selling sentiment was 2.63, down 0.12 from the previous trading day.

On October 14, Guangdong #1 copper cathode spot prices against the front-month contract:

• High-quality copper was quoted at a premium of 250 yuan/mt, unchanged from the previous trading day;
• Standard-quality copper was quoted at a discount of 50 yuan/mt, unchanged from the previous trading day;
• SX-EW copper was quoted at a discount of 110 yuan/mt, unchanged from the previous trading day.

The average price of Guangdong #1 copper cathode was 111,575 yuan/mt, up 85 yuan/mt from the previous trading day; the average price of SX-EW copper was 111,365 yuan/mt, up 85 yuan/mt from the previous trading day.

Overall, inventory declined, and suppliers held firm to yesterday's quotes, but downstream buyers were unwilling to purchase, leaving overall trading quiet.

3) Imported copper

October 14:

• The average warrant price was $136/mt, up $10/mt from the previous trading day, with a price range of $122-150/mt;
• The average B/L price was 129 yuan/mt, up $4/mt from the previous trading day, with a price range of 120-138 yuan/mt;
• The average price of EQ copper (CIF B/L) was $60/mt, unchanged from the previous trading day, with a price range of $55-65/mt.

Prices are based on cargoes arriving from October to early November.

4) Secondary copper

At 11:30 on October 14, futures closing price stood at 111,750 yuan/mt, up 250 yuan/mt from the previous trading day; spot premiums averaged -50 yuan/mt, down 70 yuan/mt MoM from the previous trading day.

Secondary copper raw material prices remained flat MoM; sales sentiment index rose to 2.6, while procurement sentiment index rose to 2.11; price difference between copper cathode and copper scrap stood at 3,704 yuan/mt, up 230 yuan/mt MoM; price difference between copper cathode rod and secondary copper rod stood at 1,000 yuan/mt.

According to SMM survey, copper prices lacked upward momentum, and many secondary copper rod enterprises kept their procurement quotes unchanged recently. Secondary copper raw material traders sold the rally, or settled prices for stored secondary copper raw materials. Secondary copper raw material prices stayed high, terminal restocking demand increased, and transactions in the secondary copper raw material market recovered somewhat.

IV. Inventory (September 30)

Social inventory in Shanghai stood at 49,200 mt, down 2,000 mt MoM; social inventory in Jiangsu stood at 12,700 mt, down 2,600 mt MoM.

V. Price Outlook

Macro:

US September CPI rose 3.7% YoY, while core CPI posted the largest MoM gain in five months, with both readings exceeding market expectations and fueling expectations for a US Fed rate hike in October. US Fed officials were divided, with some saying inflation underperformed expectations but more economic data was needed before making a judgment, while others did not rule out further rate hikes.

The latest Beige Book showed that high oil prices have spread to multiple districts across the US, boosting enterprises' expectations for price hikes. Combined with ongoing geopolitical disturbances in the Middle East, stronger inflation and rising oil prices jointly weighed on copper prices.

Fundamentals:

Supply side, domestic cargo arrivals were limited, keeping overall supply tight. Demand side, downstream procurement was mainly need-based, with demand remaining weak, leaving the market in a supply-demand weak pattern.

Overall, copper prices are expected to consolidate on a subdued note in a narrow range today.

The information provided is for reference only and does not constitute direct advice for investment research decisions. 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.