Geopolitical tensions between Iran and Israel put pressure on LME copper, causing a slight decline [SMM Copper Morning Meeting Summary]

Futures Market: On Friday evening, LME copper opened at $9,566/mt. It initially dipped to $9,532/mt before fluctuating upward throughout the session, peaking at $9,654.5/mt near the close. It eventually closed at $9,647.5/mt, down 0.44%. Trading volume reached 18,000 lots, and open interest stood at 291,000 lots. On the same evening, the most-traded SHFE copper 2507 contract opened at 77,910 yuan/mt. It also dipped initially to 77,810 yuan/mt before fluctuating upward, peaking at 78,480 yuan/mt near the close. It then dropped back slightly to close at 78,350 yuan/mt, down 0.06%. Trading volume reached 30,000 lots, and open interest stood at 192,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) Asian Battery Metals (ABM) has completed drilling analysis at the Oval target within the Yambat project in southwestern Mongolia. Key mineralization findings include: 88.5 meters of mineralization at 79 meters depth, with a copper grade of 0.62%, nickel grade of 0.45%, platinum group metals (PGM) grade of 0.22 g/t, and cobalt grade of 0.02%. Within this, 16.1 meters of mineralization was encountered at 92 meters depth, with a copper grade of 1.39%; and 0.4 meters of mineralization at 108 meters depth, with a copper grade of 4.74%.

Spot: (1) Shanghai: On June 13, SMM #1 copper cathode spot prices were quoted at a discount of 30-premium of 100 yuan/mt against the front-month 2506 contract, with an average premium of 35 yuan/mt, down 60 yuan/mt from the previous trading day. The SMM #1 copper cathode price range was 78,790-79,120 yuan/mt. The SHFE copper 2506 contract jumped initially and then pulled back briefly in the morning session, fluctuating between 78,820-78,920 yuan/mt. It briefly surged to 78,970 yuan/mt before the second trading session began, then started to decline, dipping to 78,500 yuan/mt near the morning close and closing at 78,600 yuan/mt. The BACK price spread between futures contracts widened to 300-380 yuan/mt at the open, then narrowed to 200-280 yuan/mt as arbitrageurs took profits and exited. Looking ahead to this week, with the last trading day of the SHFE copper 2506 contract approaching, the price spread is expected to fluctuate frequently. Suppliers will actively quote prices for the next-month contract, with premiums expected to start at 100-150 yuan/mt against the SHFE copper 2507 contract.

(2) Guangdong: On June 13, Guangdong #1 copper cathode spot prices were quoted at a discount of 30-premium of 80 yuan/mt against the front-month contract, with an average premium of 25 yuan/mt, down 35 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 100-80 yuan/mt, with an average discount of 90 yuan/mt, down 50 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 78,875 yuan/mt, down 135 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,760 yuan/mt, down 150 yuan/mt. Overall, as the price spread between futures contracts continued to widen, downstream buyers remained cautious. Suppliers had to lower prices to move inventory, but with limited success, resulting in weak overall trading activity.

(3) Imported copper: On June 13, the warrant prices ranged from $30 to $46/mt, with QP in June, and the average price remained unchanged from the previous trading day. The B/L prices ranged from $48 to $72/mt, with QP in July, and the average price remained unchanged from the previous trading day. The EQ copper (CIF B/L) prices ranged from $4 to $18/mt, with QP in July, and the average price remained unchanged from the previous trading day. The quotations were based on cargoes arriving in late June and early July. Overall, Yangshan copper premiums stabilized at the bottom, with a few buyers concluding long-term contract restocking deals.

(4) Secondary copper: On June 13, the prices of secondary copper raw materials remained unchanged MoM. The prices of bare bright copper in Guangdong ranged from 72,900 to 73,100 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 975 yuan/mt, down 460 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,090 yuan/mt. According to an SMM survey, a trader importing secondary copper raw materials in Ningbo said that currently, no US brass or copper could be seen in the park. Due to tariff impacts, US secondary copper raw materials could not enter the Chinese market. Although the latest round of China-US trade negotiations had concluded, the tariff issue had not been further implemented. Therefore, import traders would still not purchase secondary copper raw materials from the US.

(5) Inventory: On June 13, LME copper cathode inventories decreased by 2,375 mt to 114,475 mt. On June 13, SHFE warrant inventories increased by 3,484 mt to 36,269 mt.

Price: On the macro side, last Friday, Israel launched a fierce airstrike on Iran, targeting Iranian nuclear facilities and missile factories, and killing a large number of military commanders and nuclear scientists. The geopolitical tensions in the Middle East escalated, prompting the market to buy into safe-haven assets, pushing the US dollar index higher and suppressing copper prices. On the fundamental side, from the supply side, the expansion of the price spread between futures contracts last Friday encouraged suppliers to actively sell, but the availability of standard-quality copper in Shanghai and Changzhou remained tight. From the demand side, downstream buyers actively purchased and stockpiled last Friday, but recent copper price fluctuations led to a stronger wait-and-see sentiment among downstream buyers, and purchases remained cautious. Looking ahead to this week, the market will focus on the US Fed's decision. It is widely expected that the US Fed will maintain interest rates unchanged, and it is expected that there will be support at the bottom of copper prices today.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not rely solely on this information, replacing their own independent judgment. Any decisions made by clients are unrelated to SMM.]