Geopolitical risks continue to increase, LME copper weakened slightly overnight [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened at $9,619.5/mt, initially touching a high of $9,635.5/mt. It fluctuated considerably during the session, dipping to a low of $9,590/mt, before rebounding to close at $9,619.5/mt, down 0.32%. Trading volume reached 12,000 lots, and open interest stood at 290,000 lots. Overnight, the most-traded SHFE copper 2507 contract opened at 78,160 yuan/mt, initially touching a high of 78,350 yuan/mt. It then fluctuated downward, dipping to a low of 78,130 yuan/mt during the session, before rebounding to close at 78,280 yuan/mt, down 0.27%. Trading volume reached 16,000 lots, and open interest stood at 174,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) Kazakhmys CEO Nurakhmet Nuriyev stated in a declaration that the company's Zhomart copper mine has resumed operations. "The Zhomart copper mine has officially been approved to resume mining operations. This decision was made after a thorough assessment of the mine's condition, safety levels, and personnel readiness." Kazakhmys is Kazakhstan's largest copper producer, with 10 mines, 5 beneficiation plants, and 2 copper smelters.

Spot:

(1) Shanghai: On June 19, SMM #1 copper cathode spot premiums against the front-month 2507 contract were reported at 110-180 yuan/mt, with an average premium of 145 yuan/mt, down 35 yuan/mt from the previous trading day. The SMM #1 copper cathode price range was 78,610-78,750 yuan/mt. In the morning session, the SHFE copper 2506 contract fluctuated between 78,500-78,600 yuan/mt, with the price center gradually declining. The BACK price spread between futures contracts for the next month widened from 180 yuan/mt to nearly 200 yuan/mt. Looking ahead to tomorrow, Russian copper is still being actively sold in the market today. Despite the lower prices, the market's absorption capacity is limited. It is expected that low-priced supplies will still be difficult to fully digest tomorrow, and warrants will continue to be released. However, as it approaches Friday, downstream procurement demand is expected to improve compared to today, and the decline in Shanghai spot copper premiums is expected to be limited.

(2) Guangdong: On June 19, Guangdong #1 copper cathode spot premiums against the front-month contract were reported at 90-180 yuan/mt, with an average premium of 135 yuan/mt, down 45 yuan/mt from the previous trading day. SX-EW copper premiums were reported at 30-50 yuan/mt, with an average premium of 40 yuan/mt, down 50 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 78,675 yuan/mt, down 165 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,580 yuan/mt, down 170 yuan/mt from the previous trading day. Overall, suppliers' active liquidation of warrants continued to push premiums lower, with overall trading slightly better than yesterday.

(3) Imported copper: On June 19, warrant prices were at $32-48/mt, with a QP of July, and the average price remained unchanged from the previous trading day. B/L prices were at $50-72/mt, with a QP of July, and the average price remained unchanged from the previous trading day. EQ copper (CIF B/L) prices were at $4-18/mt, with a QP of July, and the average price remained unchanged from the previous trading day. Quotations referenced cargo arrivals in late June and early July. Overall, a large number of domestic warehouse warrants and B/Ls remain difficult to trade, with weak purchase willingness from downstream buyers.

(4) Secondary copper: On June 19, the price of secondary copper raw materials remained unchanged MoM. The price of bare bright copper in Guangdong was 72,800-73,000 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,102 yuan/mt, down 175 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,175 yuan/mt. According to an SMM survey, suppliers of secondary copper raw materials reported that copper prices pulled back towards the end of the week, and upstream suppliers were reluctant to sell. Currently, the inventory of secondary copper raw material suppliers is down 30% YoY.

(5) Inventory: On June 19, LME copper cathode inventory decreased by 4,025 mt to 103,325 mt. On the same day, SHFE warrant inventory decreased by 2,198 mt to 44,816 mt.

Price: On the macro front, Israel bombed Iranian nuclear targets on Thursday. After Iran attacked an Israeli hospital overnight, it launched missiles and drones at Israel, with no signs of either side halting their actions. Trump is expected to decide within the next two weeks whether the US will intervene in the Israel-Iran conflict, escalating geopolitical tensions and driving up the US dollar index, which is putting pressure on copper prices. On the fundamental front, from the supply side, a significant amount of SHFE warrants flowed out yesterday, and Russian low-priced copper was widely sold in the market, but the market's absorption capacity was limited. It is expected that low-priced copper will still be difficult to fully absorb today. In terms of inventory, as of Thursday, June 5, SMM's national mainstream copper inventory decreased by 2,000 mt from Monday to 146,000 mt, up 1,100 mt from Thursday last week, and 253,000 mt lower than 398,000 mt in the same period last year. On the price front, it is difficult for macro and fundamental factors to form a resonance, and it is expected that copper prices will find it difficult to stop falling and rebound today. [The information provided 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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]