Expectations for US Fed Interest Rate Cut Heat Up, Copper Prices Have Strong Support at the Bottom [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,643.5/mt, dipping to a low of $9,615.0/mt and peaking at $9,697.0/mt before closing at $9,694.5/mt, up 0.35%. Trading volume stood at 13,137 lots, with open interest at 286,663 lots. In terms of price movement, prices initially fluctuated with the center sinking, then rose steadily, touching a high near the close. Overnight, the SHFE copper 2507 contract opened at 78,340 yuan/mt, dipping to a low of 78,200 yuan/mt and peaking at 78,460 yuan/mt before closing at 78,450 yuan/mt, up 0.15%. Trading volume stood at 13,276 lots, with open interest at 154,041 lots. In terms of price movement, prices initially dipped before fluctuating upward, fluctuating at a relatively high level.

[SMM Copper Morning Meeting Summary] News: (1) Following Waller, another US Fed official has expressed support for an interest rate cut next month. Notably, both governors were appointed by Trump during his first term. On Monday, Fed Governor Bowman, discussing the economy and monetary policy, stated that if inflation pressures remain contained, she would support lowering interest rates as early as July, as risks in the labour market may rise while inflation appears to be steadily moving towards the Fed's 2% target.

(2) The National Federation of Industry and Commerce Automobile Dealers Chamber has issued an initiative calling on automobile producers to optimize rebate policies and shorten the rebate realization period. The initiative includes three key points: first, establishing clear and transparent rebate policies; second, shortening the rebate realization period; and third, eliminating excessive restrictions on rebate realization and usage.

Spot Market: (1) Shanghai: On June 23, SMM #1 copper cathode spot premiums against the front-month 2507 contract were reported at 60-120 yuan/mt, with an average premium of 90 yuan/mt, down 30 yuan/mt from the previous trading day. Looking ahead to today, the significant decrease in inventory in the Shanghai area over the weekend was mainly due to the gradual outflow of delivery warrants. However, there is still pressure to sell and receive payments in the market today, so spot premiums are expected to decline further.

(2) Guangdong: On June 23, Guangdong #1 copper cathode spot premiums against the front-month contract were reported at 20-100 yuan/mt, with an average premium of 60 yuan/mt, down 30 yuan/mt MoM. Overall, despite suppliers actively lowering prices to sell, overall trading remained sluggish, mainly due to bearish market sentiment.

(3) Imported Copper: On June 23, warrant prices ranged from $32/mt to $48/mt, with QP July, and the average price remained unchanged MoM. B/L prices ranged from $50/mt to $72/mt, with QP July, and the average price remained unchanged MoM. EQ copper (CIF B/L) prices ranged from $4/mt to $18/mt, with QP July, and the average price remained unchanged MoM. Quotations are based on cargo arrivals in late June and early July. Overall, the market continued its sluggish trend from last week this week, with most market participants remaining in a wait-and-see stance.

(4) Secondary copper: On June 23, the price of secondary copper raw materials remained unchanged WoW. The price of bare bright copper in Guangdong was 72,600-72,800 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,020 yuan/mt, up 100 yuan/mt WoW. The price difference between copper cathode rod and secondary copper rod was 875 yuan/mt. According to an SMM survey, import traders reported that due to the fluctuating decline in overseas copper prices, overseas suppliers refused to budge on prices amid tight supply. However, the discount coefficient has been on the high side since June, making it difficult for domestic import traders to secure deals for secondary copper raw materials overseas.

(5) Inventory: On June 23, LME copper cathode inventory decreased by 3,325 mt to 95,875 mt. On the same day, SHFE warrant inventory decreased by 8,354 mt to 25,528 mt.

Price: On the macro front, Fed officials Bowman and Goolsbee both hinted that they would support an interest rate cut in July if inflationary pressures were contained. Goolsbee claimed that there had been a lack of significant inflationary pressures since Trump imposed tariffs on April 2, which might allow the Fed to resume interest rate cuts. Bowman stated that she would support a July interest rate cut if inflation remained mild. The US dollar index continued to decline, supporting copper prices. On the fundamental front, as of Monday, June 23, SMM's nationwide copper inventories in major regions decreased by 16,300 mt WoW to 129,600 mt. Compared to the inventory changes from last Thursday, inventories in all regions across the country declined, mainly due to lower arrivals combined with warrant outflows. As month-end approached, suppliers actively sold off their stocks, but the market remained bearish on the outlook, expecting spot premiums to continue to decline. In summary, with the US dollar index continuing to fall, copper prices are expected to find bottom support today.

》Click to view SMM Metal Database

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