Futures Market: Overnight, LME copper opened at $9,457/mt, initially touching a high of $9,478/mt before fluctuating downward throughout the session. It hit a low of $9,400.5/mt near the close, rebounded slightly, and finally closed at $9,406/mt, down 1.2%. Trading volume reached 15,000 lots, and open interest stood at 292,000 lots. Overnight, the most-traded SHFE copper 2506 contract opened at 77,620 yuan/mt, initially touching a high of 77,710 yuan/mt before fluctuating downward during the session and hitting a low of 77,340 yuan/mt. It fluctuated rangebound near the close and finally closed at 77,450 yuan/mt, down 0.74%. Trading volume reached 36,000 lots, and open interest stood at 177,000 lots.
[SMM Copper Morning Meeting Summary] News: (1) The US Fed recently decided to pause interest rate cuts again at its meeting. Fed Chairman Powell also reiterated after the meeting that the Fed is not in a hurry to act and does not believe it should preemptively cut interest rates in response to tariff shocks, once again contradicting US President Trump, who has repeatedly urged for immediate rate cuts.
(2) In April, China's Logistics Business Activity Index stood at 51.1%. The overall demand for logistics services maintained an expansionary trend, with a notable rebound in the western region. Among the main sub-indices, the index for completed fixed asset investment reached a new three-year high, with both railway and waterway investments maintaining rapid growth.
Spot Market: (1) Shanghai: On May 7, SMM #1 copper cathode spot prices against the front-month 2505 contract were reported at a premium of 240-280 yuan/mt, with an average premium of 260 yuan/mt, down 25 yuan/mt MoM. Currently, the open interest of the front-month SHFE copper contract corresponds to a delivery volume nearly 10 times that of the existing futures warrants. The market needs to be cautious about the risk of further widening of the price spread between futures contracts. It is expected that under the influence of the price spread tomorrow, spot premiums will come under some pressure.
(2) Guangdong: On May 7, Guangdong #1 copper cathode spot prices against the front-month contract were reported at 160-280 yuan/mt, with an average premium of 220 yuan/mt, up 40 yuan/mt from the previous trading day. Overall, with the widening of the price spread between futures contracts, downstream restocking was not active, and spot premiums jumped initially and then pulled back.
(3) Imported Copper: On May 7, warrant prices were $96-104/mt, with QP May, and the average price remained flat MoM. B/L prices were $105-125/mt, with QP May, and the average price remained flat MoM. EQ copper (CIF B/L) prices were $68-78/mt, with QP May, and the average price rose $3/mt MoM. Quotations referenced cargo arrivals in mid-to-early May. Overall, EQ supplies remain tight, and it is expected that the center of trading will continue to rise in the future market.
(4) Secondary Copper: On May 7, the price of secondary copper raw materials rose 100 yuan/mt MoM. Guangdong bare bright copper prices were 72,100-72,300 yuan/mt, up 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,621 yuan/mt, down 102 yuan/mt MoM.The price difference between copper cathode rod and secondary copper rod was 1,330 yuan/mt. According to the SMM survey, after the price difference between copper cathode rod and secondary copper rod rose above the advantage line, coupled with the post-holiday restocking demand from end-user cable manufacturers, secondary copper rod enterprises reported moderate willingness from downstream to place orders. However, considering the high raw material prices severely compressing the sales profits of secondary copper rod and tight supply, the market circulation of secondary copper raw materials is limited, and secondary copper rod enterprises indicated that they are taking orders on a daily quota basis.
(5) Inventory: On May 7, LME copper cathode inventories decreased by 1,650 mt to 193,975 mt; on May 7, SHFE warrant inventories decreased by 3,381 mt to 21,541 mt.
Price: On the macro front, the US Fed maintained interest rates unchanged for the third consecutive time, emphasizing the rising risks of inflation and unemployment in its statement. Powell highlighted the uncertainties and the low cost of continued wait-and-see, indicating no rush to cut interest rates, which pressured copper prices as the US dollar index strengthened. On the fundamental side, demand showed significant divergence. In the morning session, market purchasing sentiment was moderate, with active spot premiums for different brands of spot copper. However, in the afternoon, as the price spread between futures contracts widened, purchasing sentiment quickly cooled, with few actual transactions, and downstream buyers drove down purchasing prices. Overall, demand remained cautious and watchful. In terms of price, after sentiment is digested, copper prices are expected to have some upside room today.
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[The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article 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 are unrelated to SMM.]
