US Holds Trade Talks with Multiple Countries, Copper Prices Stabilize Temporarily [SMM Copper Morning Meeting Summary]

Futures Market: On Friday evening, LME copper opened at $9,684.5/mt, reaching a high of $9,728.5/mt during the session and a low of $9,665.0/mt towards the close. It eventually closed at $9,670.5/mt, down 0.38%, with a trading volume of 15,603 lots and an open interest of 288,236 lots. The overall trend saw an initial surge followed by a fluctuating decline, presenting a volatile pullback pattern. On the same evening, the most-traded SHFE copper 2507 contract opened at 78,580 yuan/mt, surging to 78,820 yuan/mt at the start of the session before fluctuating downward. It reached a low of 78,480 yuan/mt and eventually closed at 78,620 yuan/mt, down 0.24%, with a trading volume of 32,807 lots and an open interest of 200,380 lots. The overall trend showed an initial surge followed by a fluctuating pullback, with prices oscillating around the moving average.

[SMM Copper Morning Meeting Summary] News: (1) The spokesperson of the Ministry of Foreign Affairs announced that at the invitation of the UK government, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, visited the UK from June 8 to 13. During the visit, he will hold the first meeting of the China-US Economic and Trade Consultation Mechanism with the US side.

(2) In the US, non-farm payrolls increased by 139,000 in May, compared to an estimated increase of 126,000 and a prior increase of 177,000. The US unemployment rate in May was 4.2%, in line with expectations and the previous reading of 4.2%.

Spot: (1) Shanghai: On June 6, SMM reported that the spot price of #1 copper cathode in Shanghai was at parity to a premium of 150 yuan/mt against the front-month 2506 contract, with an average premium of 75 yuan/mt, down 15 yuan/mt MoM. Looking ahead to this week, as the contract rollover approaches, there is still a gap between the current open interest and the available warrants. With a back-month spread of only 100 yuan/mt and smelters expressing export intentions, the deliverable supply in the market this week will be limited. Caution is advised against the risk of a further widening of the monthly spread.

(2) Guangdong: On June 6, the spot price of #1 copper cathode in Guangdong was at a discount of 60 yuan/mt to a premium of 60 yuan/mt against the front-month contract, with an average price at parity, up 15 yuan/mt MoM. Overall, with inventory declining for two consecutive weeks, suppliers are actively refusing to budge on prices, leading to rising premiums.

(3) Imported copper: On June 6, warrant prices ranged from $35 to $47/mt, with a QP in June, and the average price fell $38/mt MoM. B/L prices ranged from $50 to $80/mt, with a QP in July, and the average price fell $33/mt MoM. EQ copper (CIF B/L) prices ranged from $8 to $20/mt, with a QP in July, and the average price fell $32/mt MoM. Quotations are based on cargoes expected to arrive in mid-to-late June. Overall, spot premiums have collapsed significantly. According to SMM, major domestic smelters are actively planning for exports, and offshore spot premiums will continue to face short-term pressure.

(4) Secondary copper: On June 6, the price of secondary copper raw materials rose by 300 yuan/mt MoM. The price of bare bright copper in Guangdong ranged from 72,700 to 72,900 yuan/mt, up 300 yuan/mt MoM. The price difference between copper cathode and copper scrap was 1,388 yuan/mt, up 176 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod is 1,120 yuan/mt. According to the SMM survey, overseas suppliers of secondary copper raw materials have reported that although the price coefficient of secondary copper raw materials in the US pulled back this week, prices from local suppliers in Europe remain firm. It is expected that the price of secondary copper raw materials in Europe will hold steady for some time.

(5) Inventory: On June 6, LME copper cathode inventories decreased by 5,600 mt to 132,400 mt. On the same day, SHFE warrant inventories increased by 591 mt to 32,278 mt.

Price: On the macro front, data shows that US employment growth in May was better than expected, although the growth rate slowed compared to the previous month. This suggests that the US Fed may wait longer before cutting interest rates. Data from the US Department of Labor indicates that employers added 139,000 jobs in May, fewer than the 147,000 added in April, but exceeding the 130,000 increase forecasted in a survey of economists. Due to better-than-expected US employment data, the US dollar strengthened, putting pressure on copper prices. On the fundamental front, imported copper continues to replenish supplies, but mainstream sources remain tight due to trade circulation demand, with high brand price differentials. There is still a gap between current open interest and warrant inventories. With smelters expressing export intentions, delivery supplies are limited this week, and there is a risk of further widening of the price spread between futures contracts under the backwardation structure. Overall, the US dollar index has pulled back to some extent, and there has been progress in trade negotiations between the US and India, Japan, the EU, South Korea, and Thailand. It is expected that copper prices will stabilize today, with support at the bottom.

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[The above information is based on market collection and comprehensive assessment by the SMM research team. The information provided herein is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make prudent decisions and should not rely on this information to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.]