Sino-US trade relations remain unclear, curbing the rise of copper prices [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,672.0/mt, dipping to a low of $9,667.5/mt early in the session before climbing to a high of $9,709.5/mt. The overall trend was fluctuating with upward momentum, marked by multiple price fluctuations, and it eventually closed at $9,690.5/mt, with open interest at 289,206 lots. Overnight, the most-traded SHFE copper 2507 contract opened at 78,600 yuan/mt, experiencing fluctuations early in the session, reaching a high of 78,760 yuan/mt and a low of 78,550 yuan/mt. The overall trend was fluctuating, with repeated price fluctuations, and it eventually closed at 78,580 yuan/mt, down 0.13%, with trading volume reaching 20,385 lots and open interest at 201,581 lots.

[SMM Copper Morning Meeting Summary] News: (1) In May, the overall increase in the US Producer Price Index (PPI) remained mild, with the core PPI hitting its lowest level since August 2024, indicating once again that tariffs have not yet imposed higher price pressures on consumers and businesses. On Thursday, June 12, data released by the US Bureau of Labor Statistics showed that the US PPI rose 2.6% YoY in May, in line with expectations and up from 2.4% in the previous month.

(2) The US Department of Commerce announced that it would impose tariff hikes on a variety of steel-based household appliances starting from June 23, including "steel derivatives" such as dishwashers, washing machines, and refrigerators. It is understood that the 50% tariff set for most countries will affect the import of these steel products, potentially leading to higher consumer prices. Industry stakeholders are closely monitoring developments.

Spot: (1) Shanghai: On June 12, 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, unchanged MoM. Today, as copper prices fell, downstream purchasing sentiment improved, but downstream players are more inclined to purchase after contract rollover due to the current backwardation structure. For suppliers, there is almost no willingness to sell at a discount, and it is expected that the market will still see small premiums in transactions today.

(2) Guangdong: On June 12, Guangdong #1 copper cathode spot prices were quoted at 20 yuan/mt premium to 100 yuan/mt premium against the front-month contract, with an average premium of 60 yuan/mt, down 30 yuan/mt MoM. Overall, both inventory and copper prices fell, but the price spread between futures contracts widened, leading to weaker trading and a decline in premiums.

(3) Imported Copper: On June 12, warrant prices ranged from $30/mt to $46/mt, with a QP in June, and the average price remained unchanged MoM. B/L prices ranged from $48/mt to $72/mt, with a QP in July, and the average price remained unchanged MoM. EQ copper (CIF B/L) prices ranged from $4/mt to $18/mt, with a QP in July, and the average price remained unchanged MoM. Quotations were based on cargo arrivals in late June and early July. Overall, market trading remained sluggish, but offers became significantly more active.

(4) Secondary Copper: On June 12, the price of secondary copper raw materials fell by 100 yuan/mt MoM. In Guangdong, bare bright copper prices ranged from 72,900 yuan/mt to 73,100 yuan/mt, down 100 yuan/mt 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 is 1,350 yuan/mt. According to the SMM survey, many secondary copper rod enterprises reported that copper prices have pulled back. However, many suppliers of secondary copper raw materials refused to budge on prices when selling, and the discount of secondary copper rod against copper futures did not decrease along with the drop in copper prices. Even when downstream end-users or traders pressed for a 100-150 yuan/mt reduction in the price of secondary copper rod, secondary copper rod enterprises were unwilling to accept this price, resulting in generally average daily transaction volumes.

(5) Inventory: On June 12, LME copper cathode inventories decreased by 2,600 mt to 116,850 mt; on the same day, SHFE warrant inventories decreased by 588 mt to 32,785 mt.

Price: On the macro front, the number of initial jobless claims in the US for the week ending June 7 was 248,000, higher than the expected 240,000 and the highest since the week ending October 5, 2024. The US core PPI month-on-month rate for May was 0.1%, lower than the expected 0.30%. Traders have once again fully priced in two interest rate cuts by the US Fed this year, causing the US dollar index to decline and supporting copper prices. However, the unresolved tariff and trade outlook continues to weigh on copper price movements. On the fundamental side, the decline in copper prices has slightly improved downstream procurement sentiment. However, under the current backwardation structure, the market is more inclined to make purchases after contract rollover, and the improvement in market trading activity has been limited. Overall, with the unresolved tariff outlook between China and the US, it is expected that there will be certain upward pressure on copper prices today.

[The above information is based on market collection and comprehensive assessment 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 cautious decisions and should not rely on this information to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.]