Expectations for US Fed Interest Rate Cut Intensify, Copper Prices Unlikely to Decline [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,640.5/mt, reached a high of $9,705.0/mt during the session, hit a low of $9,614.0/mt at the beginning of the session, and finally closed at $9,647.0/mt, down 0.80%. Trading volume was 22,671 lots, and open interest was 288,336 lots. The overall trend saw prices initially hit a low, then rally before fluctuating downward, with significant price fluctuations, indicating a certain degree of downward fluctuation. Overnight, the most-traded SHFE copper 2507 contract opened at 78,740 yuan/mt, reached a high of 78,800 yuan/mt during the session, hit a low of 78,510 yuan/mt, and finally closed at 78,570 yuan/mt, down 0.77%. Trading volume was 40,646 lots, and open interest was 202,372 lots. The overall trend was a downward fluctuation after opening, with prices gradually declining amid price fluctuations.

[SMM Copper Morning Meeting Summary] News: (1) The US May CPI was lower than expected for the fourth consecutive month, indicating that tariffs have not yet affected the overall inflation level. On Wednesday, June 11, the US Bureau of Labor Statistics released CPI data for May, all of which were lower than expected. The overall CPI rose only 0.1% MoM, lower than the expected 0.2%, compared to a 0.2% increase in April. The CPI rose slightly by 2.4% YoY, in line with expectations, compared to 2.3% in April.

(2) The Ministerial Meeting of Coordinators for the Implementation of the Outcomes of the Forum on China-Africa Cooperation was held in Changsha, Hunan Province. President Xi Jinping sent a congratulatory letter to the meeting, announcing that China would implement zero-tariff measures for 100% of tariff items for 53 African countries with diplomatic relations, providing more convenience for the least developed African countries to export to China. China is willing to work with Africa to thoroughly implement the "Ten Partnership Actions," providing important guidance for China and Africa to jointly promote modernization and build an all-weather China-Africa community with a shared future for the new era.

Spot: (1) Shanghai: On June 11, SMM #1 copper cathode spot prices were quoted at a premium of 40-150 yuan/mt against the front-month 2506 contract, with an average premium of 95 yuan/mt, up 10 yuan/mt from the previous trading day. Looking ahead to today, the supply of standard-quality copper is not expected to loosen in the second half of the week. Currently, with copper prices at a high level, downstream buyers are generally bargaining down purchasing prices. However, as the delivery date approaches, suppliers are unwilling to sell below parity. It is reported that some Russian copper will arrive in concentrated shipments at the end of the week, and downstream buyers are expected to be willing to purchase at lower prices.

(2) Guangdong: On June 11, Guangdong #1 copper cathode spot prices were quoted at 30 yuan/mt premium to 150 yuan/mt premium against the front-month contract, with an average premium of 90 yuan/mt, up 30 yuan/mt MoM. Overall, with inventory declining for five consecutive days, suppliers are refusing to budge on prices, but actual transactions have been average.

(3) Imported copper: On June 11, warrant prices ranged from $37/mt to $49/mt, with a QP in June, and the average price remained unchanged MoM. B/L prices ranged from $52/mt to $80/mt, with a QP in July, and the average price remained unchanged MoM. EQ copper (CIF B/L) prices ranged from $10/mt to $20/mt, with a QP in July, and the average price remained unchanged MoM. Quotations are based on cargo arrivals in mid-to-late June. Overall, there has been an increase in tentative inquiries and offers, but the spread between buying and selling premiums remains fragmented.

(4) Secondary Copper: On June 11, the price of secondary copper raw materials remained unchanged MoM. The price of bare bright copper in Guangdong was 73,000-73,200 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,629 yuan/mt, up 90 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,550 yuan/mt. According to the SMM survey, as the price difference between copper cathode and copper scrap continued to widen, reaching 1,550 yuan/mt, secondary copper rod enterprises reported improvements in order placements from both terminal wire and cable enterprises and traders. These enterprises estimated that the operating rate of secondary copper rods would rebound significantly MoM this week.

(5) Inventory: On June 11, LME copper cathode inventory decreased by 950 mt to 119,450 mt. On the same day, SHFE warrant inventory decreased by 373 mt to 33,373 mt.

Price: On the macro front, the US May CPI data fell short of expectations across the board. The US May unadjusted CPI year-on-year rate was recorded at 2.4%, against market expectations of 2.5%. The US May unadjusted CPI month-on-month rate was recorded at 0.1%, against market expectations of 0.2%. The US May unadjusted core CPI year-on-year rate was recorded at 2.8%, against market expectations of 2.9%. The US May seasonally adjusted core CPI month-on-month rate was recorded at 0.1%, against market expectations of 0.3%. Expectations for US Fed interest rate cuts increased, and the US dollar index weakened. However, market concerns about the future economic outlook intensified, along with fears of potential US tariffs on copper, causing copper prices to come under pressure. On the fundamental front, in terms of supply, the availability of standard-quality copper remained tight, while market trading activity was generally moderate amid high copper prices. In summary, market concerns have largely been digested. With the US dollar index weakening, copper prices are expected to stabilize today, and a sustained decline is unlikely.

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