SMM Weekly Price Outlook for Base Metals on LME and SHFE (Jul. 24-28, 2017)

SMM Morning Brief: Overnight, LME copper opened at $13,740/mt, touched a high of $13,764/mt in early trading, then its price center consolidated lower toward the close, dipping to $13,560/mt, and finally settled at $13,566/mt, down 1.74%. Trading volume reached 20,000 lots, and open interest stood at 247,000 lots, up 1,022 lots from the previous trading day, reflecting an increase in bearish positions. Overnight, the most-traded SHFE copper 2609 contract opened at 105,100 yuan/mt, initially moved up to 105,290 yuan/mt, then its price center shifted straight down to hit a low of 104,310 yuan/mt, and afterwards moved sideways to eventually settle at 104,530 yuan/mt, down 1.4%. Trading volume totaled 67,600 lots, and open interest reached 212,000 lots, down 12,500 lots from the previous trading day, reflecting a reduction in bullish positions.

Recently, heavy rainfall and high-altitude snowfall hit central Chile and the Atacama region, prompting multiple copper mines to initiate winter emergency measures. Los Pelambres, owned by Antofagasta Minerals, temporarily restricted access to the mine site and preemptively scaled back non-critical operations, though no full production suspension has been reported so far. Andina, operated by Codelco, suspended surface operations, while El Teniente halted open-pit ore transport at one point due to hillside snow accumulation. Among these, Caserones was the most significantly affected. Lundin Mining stated that the mine has been suspended since July 18 due to heavy snow, restricted road access, and an on-site power outage. It is currently relying solely on backup generators to sustain critical activities, and production will resume once power is restored and road access improves. As of July 24, the company had not yet issued a production resumption announcement, but Lundin Mining maintained its full-year production guidance. Overall, this round of disruptions was concentrated in central Chile and some high-altitude mining areas. The major copper mines in the far north generally maintained operations, and a nationwide large-scale production halt has not materialized. In the near term, attention should continue to be paid to the timing of Caserones' production resumption and the progress in restoring road access and power at the mine site.