US-China Trade War Concerns Ease, US Dollar Index Plunges, Bullish for Copper Prices [SMM Copper Morning Meeting Summary]

Published: Jan 21, 2025 09:02

Save

[SMM Morning Meeting Summary: Easing US-China Trade War Concerns, US Dollar Index Plunges, Bullish for Copper Prices] On January 20, #1 copper cathode spot prices against the SHFE 2502 contract were quoted at a premium of 40-90 yuan/mt, with an average premium of 65 yuan/mt, down 20 yuan/mt from the previous trading day. According to SMM, last weekend saw continued destocking in the Shanghai region, with limited arrivals of domestic supplies and only regular imports...

Futures Market: Overnight, LME copper opened at $9,178/mt, initially dipping to $9,149/mt, then surging to a high of $9,297/mt during intraday trading. It fluctuated rangebound towards the close and finally settled at $9,266/mt, up 0.92%. Trading volume reached 22,000 lots, and open interest stood at 291,000 lots. Overnight, the most-traded SHFE copper 2503 contract opened at 75,350 yuan/mt, initially dipping to 75,200 yuan/mt before climbing to an intraday high of 75,870 yuan/mt. It dropped back slightly towards the close, finally settling at 75,740 yuan/mt, up 0.09%. Trading volume reached 31,000 lots, and open interest stood at 158,000 lots.

【SMM Copper Morning Brief】News: (1) Donald Trump was officially sworn in as the US President, delivering the longest inaugural speech since 1929, addressing topics such as tariffs, energy, and green policies, but omitting cryptocurrency. New White House officials stated that the US would withdraw from the Paris Climate Agreement. US media reported that Trump plans to issue a memorandum on trade policy but will not impose new tariffs on his first day in office.

(2) Trump expressed his hope to visit China within his first 100 days in office. The Chinese Ministry of Foreign Affairs responded that China is willing to work with the new US administration to achieve greater progress in China-US relations from a new starting point.

Spot Market: (1) Shanghai: On January 20, #1 copper cathode spot premiums against the front-month 2502 contract were quoted at 40-90 yuan/mt, with an average of 65 yuan/mt, down 20 yuan/mt from the previous trading day. According to SMM, inventories in Shanghai continued to decline over the weekend, with limited domestic supply arrivals. On the import side, apart from regular port arrivals, only some LME canceled warrants were shipped to east China. On the demand side, pre-holiday downstream consumption remained sluggish, and stockpiling sentiment was moderate. Spot premiums are expected to continue declining.

(2) Guangdong: On January 20, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 180-50 yuan/mt, with an average discount of 115 yuan/mt, down 40 yuan/mt from the previous trading day. Overall, weak consumption led suppliers to continuously lower prices to facilitate sales, resulting in muted trading activity.

(3) Imported Copper: On January 20, warehouse warrant prices were $71-81/mt, QP February, with the average price unchanged from the previous trading day. B/L prices were $56-70/mt, QP February, also unchanged. EQ copper (CIF B/L) was quoted at $6-20/mt, QP February, with the average price unchanged. Quotes referenced late January to early February port arrivals. Yesterday, the SHFE/LME price ratio for the SHFE copper 2502 contract was around -530 yuan/mt. LME copper 3M-Feb was at C$62.54/mt, while the 2502-month date and 2503-month date spread was around C$35/mt. The market remained quiet yesterday, with limited inquiries and offers. A small number of post-holiday port-arrival B/L cargoes were quoted firmly, but transactions were scarce.

(4) Secondary Copper: On January 20, secondary copper raw material prices dropped by 500 yuan/mt MoM. Guangdong bare bright copper prices were 68,400-68,600 yuan/mt, down 500 yuan/mt MoM. The price difference between primary metal and scrap was 2,593 yuan/mt, down 478 yuan/mt MoM. The price difference between primary and secondary copper rods was 1,230 yuan/mt. According to the SMM survey, some secondary copper raw material yards and secondary copper rod plants began their holidays yesterday. Many secondary copper rod enterprises indicated they would not stockpile excessive secondary copper raw materials before the holiday, fearing policy impacts on raw material prices.

(5) Inventory: On January 20, LME copper cathode inventories increased by 75 mt to 260,150 mt. SHFE warehouse warrant inventories rose by 258 mt to 15,449 mt.

Prices: Macro side, Donald Trump was officially sworn in as the US President, delivering the longest inaugural speech since 1929, addressing topics such as tariffs, energy, and green policies, but omitting cryptocurrency. US media reported that Trump plans to issue a memorandum on trade policy on Monday but will not impose new tariffs on his first day in office. The news eased market concerns over a US-China trade war, leading to a drop in the US dollar index and pushing LME copper to new highs. Fundamentals side, domestic copper cathode arrivals were limited, while imported copper cathode saw a slight increase. However, as downstream end-user enterprises gradually began their holidays and largely completed stockpiling, market transactions were moderate. As of Monday, January 20, SMM data showed that copper inventories in major regions across China increased by 1,700 mt from last Thursday to 109,800 mt. Total inventories were 29,000 mt higher YoY compared to 80,800 mt last year, with Shanghai up 14,800 mt YoY, Guangdong up 3,900 mt YoY, and Jiangsu up 9,500 mt YoY. Amid weak consumption, weekly inventories are expected to continue rising. On the price side, copper prices are expected to find some support at the bottom today.

》Click to View SMM Metal Database

【The above information is based on market data collected and comprehensive evaluations by the SMM research team. The information provided is for reference only and does not constitute direct investment advice. Clients should make cautious decisions and not substitute this information for independent judgment. Any decisions made by clients are not related to SMM.】

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

1 hour ago

PT Freeport Indonesia Develops Kucing Liar Mine for Long-Term Copper and Gold Supply

According to foreign media reports, PT Freeport Indonesia is continuing development of the Kucing Liar underground copper-gold mine within the Grasberg minerals district in Central Papua, with initial mining targeted for 2029 and production expected to ramp up thereafter. The project is being developed as a long-term source of replacement supply as production from the Deep Mill Level Zone declines. Development of the underground deposit has been underway for several years and requires substantial investment in mine access and supporting underground infrastructure. Recent reports indicate that approximately $1.4 billion has already been invested, with a further roughly $4 billion expected through 2033 as development progresses. At full operating rates, Kucing Liar is expected to process approximately 130,000 tonnes of ore per day and produce around 750 million lb of copper annually, equivalent to roughly 340,000 tonnes, alongside approximately 735,000 oz of gold. Freeport-McMoRan currently estimates that the deposit could contribute more than 8 billion lb of copper through 2041. From a copper-market perspective, Kucing Liar represents a significant source of prospective long-term mine supply from the Grasberg district. Its development is particularly important because it is intended to help offset declining output from mature underground areas and sustain Freeport Indonesia's large-scale copper production over the longer term.

1 hour ago

4 hours ago

[SMM Analysis]U.S. Restricts Critical Mineral Scrap Exports — Could Copper Scrap Be Next?

[SMM Analysis: U.S. Restricts Critical Mineral Scrap Exports — Could Copper Scrap Be Next?]The U.S. has imposed a 100% domestic sales requirement on black mass and tungsten scrap, signaling tighter control over strategic secondary resources. Copper scrap is not yet included, but SMM expects more high-grade scrap to stay in the U.S. as local processing capacity expands, tightening global supply and supporting high scrap coefficients.

4 hours ago

Jubilee Receives Two Binding Offers for Zambia Waste Project, Redirects Capital Toward Copper Growth

Jubilee Metals Group has received two binding offers for the outright acquisition of its Large Waste Project (LWP) in Zambia at what the company described as a substantial premium to the project’s original acquisition price. A preferred purchaser is expected to be selected before definitive transaction agreements are concluded, potentially providing Jubilee with additional capital to accelerate the development of its remaining copper portfolio in the country. The proposed disposal forms part of Jubilee’s broader strategy to reduce its exposure to higher-capital greenfield development and redirect investment toward the expansion of existing Zambian operations. The company has highlighted the Molefe Mine in particular, where it plans to develop on-site copper processing capacity as part of a lower-capital and lower-risk growth strategy. The approach is intended to make greater use of existing infrastructure while bringing additional copper production online more efficiently. Proceeds from the proposed LWP disposal, together with remaining cash from the sale of Jubilee’s South African operations and other non-core waste assets, are expected to generate total cash inflows approaching $100 million. The additional financial flexibility is expected to support accelerated investment across Jubilee’s Zambian copper operations while strengthening the company’s ability to fund its expansion plans internally. The strategic shift comes as Jubilee continues to work toward expanding its integrated copper operations in Zambia, with the company targeting approximately 25,000 tonnes per year of copper production as its operations scale up. Redirecting capital toward existing mining and processing assets could therefore support a more immediate contribution to production growth than pursuing the Large Waste Project as a standalone greenfield development. From a copper-market perspective, the proposed transaction represents a shift in capital allocation toward nearer-term production growth rather than the development of a new standalone project. By prioritising assets capable of leveraging existing mining and processing infrastructure, Jubilee is seeking to shorten development timelines, reduce execution risk and expand its integrated copper footprint in Zambia. If successfully implemented, the strategy would add to the pipeline of projects supporting Zambia’s medium-term copper supply growth.

4 hours ago