Copper Prices Remain Supported at the Bottom Amid Uncertainty in Global Economic Outlook [SMM Copper Morning Meeting Summary]

Futures Market: On Friday evening, LME copper opened at $9,628.5/mt, surging to a high of $9,700/mt at the beginning of the session, then fluctuating downward, hitting a low of $9,621.5/mt during the session, and finally closing at $9,660.5/mt with a slight correction, up 0.43%. Trading volume was 16,794 lots, and open interest was 288,717 lots. The overall trend was a surge followed by a pullback, then a fluctuation upward. On Friday evening, the SHFE copper 2507 contract opened at 78,480 yuan/mt, hitting a high of 78,580 yuan/mt at the beginning of the session, then fluctuating downward to a low of 78,260 yuan/mt during the session, and finally closing at 78,380 yuan/mt after some fluctuations at the end, up 0.26%. Trading volume was 18,246 lots, and open interest was 162,379 lots. The overall trend was a high followed by a fluctuation downward.

[SMM Copper Morning Meeting Summary] News: (1) Fed Chairman Powell will head to Capitol Hill to face questioning from lawmakers. He will defend a key decision: why the Fed has chosen to hold steady and pause interest rate cuts amid trade friction clouds and concerns about economic slowdown? A debate on the direction of monetary policy is about to unfold in Congress.

(2) Affected by the escalating Israel-Iran conflict, the global shipping market has experienced severe turbulence. The Baltic Heavy Fuel Oil Tanker Index shows that international average freight rates rose by 12% over the past week, with some high-risk routes, such as those from the Persian Gulf to Europe and from Asia to Europe via the Red Sea, seeing freight rates surge by as much as 2.5 times.

Spot: (1) Shanghai: On June 20, SMM #1 copper cathode spot prices against the front-month 2507 contract were reported at premiums of 80-160 yuan/mt, with an average premium of 120 yuan/mt, down 25 yuan/mt from the previous trading day. Looking ahead to this week, it is reported that with the semi-annual settlement approaching, most enterprises have a need for cash flow, and it is expected that the demand for enterprises to sell goods for cash will increase this week, and spot premiums will fall further.

(2) Guangdong: On June 20, Guangdong #1 copper cathode spot prices against the front-month contract were reported at premiums of 50-130 yuan/mt, with an average premium of 90 yuan/mt, down 45 yuan/mt MoM. Overall, the continuous outflow of warrants has suppressed premiums. Attention should be paid to the arrival situation this week. If arrivals increase, premiums may fall further.

(3) Imported Copper: On June 20, warrant prices were $32-48/mt, with QP July, and the average price remained unchanged MoM. B/L prices were $50-72/mt, with QP July, and the average price remained unchanged MoM. EQ copper (CIF B/L) prices were $4-18/mt, with QP July, and the average price remained unchanged MoM. Quotations refer to cargo arriving in late June and early July. Overall, the market continued its sluggish trend last week, with most market participants in a wait-and-see state.

(4) Secondary Copper: On June 20, the price of secondary copper raw materials fell by 200 yuan/mt MoM. The price of bare bright copper in Guangdong was 72,600-72,800 yuan/mt, down 200 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 920 yuan/mt, down 182 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 875 yuan/mt. According to the SMM survey, importers of secondary copper raw materials in Ningbo, Zhejiang Province, reported that although overseas copper prices fluctuated and pulled back during the week, the quotes from European suppliers of secondary copper raw materials did not change significantly. As the coefficient for bare bright copper is currently quoted at 99.3%-99.5% of the LME 0-3 contract, even if copper prices pull back, the coefficient cannot be increased further.

(5) Inventory: On June 20, LME copper cathode inventories decreased by 4,125 mt to 99,200 mt; on June 20, SHFE warrant inventories decreased by 10,934 mt to 33,882 mt.

Price: On the macro front, Trump: The US military conducted air strikes on three major Iranian nuclear facilities, including Fordow, and Iran must immediately agree to end the war; Iranian Foreign Minister: Nuclear facilities can be rebuilt even if destroyed, and technical knowledge "cannot be bombed away." The Iranian Parliament voted in favor of closing the Strait of Hormuz, and the Houthi rebels stated that they would resume attacks on US ships. Meanwhile, Trump questioned why the Iranian regime could not be changed. Due to the uncertainty of the Middle East war, copper prices opened higher and closed up. On the fundamental side, the price spread between futures contracts widened, and warrants flowed out. With the semi-annual settlement approaching, it is expected that under the demand for enterprises to ship goods and receive payments, the premium will fall further. Overall, amid the uncertainty of the global economic outlook, it is expected that there will still be support at the bottom of copper prices today.

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[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.]