Copper prices soared, suppliers cleared inventory at low prices, and premiums fell [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,752.5/mt, reaching a high of $9,759/mt and a low of $9,649/mt during the session, before closing at $9,664/mt, down 0.31%. The overall trend first surged and then pulled back, showing a fluctuating downward pattern. Trading volume was 21,098 lots, and open interest was 284,256 lots. Overnight, SHFE copper 2508 opened at 78,330 yuan/mt, reaching a high of 78,390 yuan/mt and a low of 78,130 yuan/mt during the session, before closing at 78,300 yuan/mt, up 0.04%. The overall trend first dipped and then rebounded with fluctuations. Trading volume was 24,597 lots, and open interest was 156,385 lots. [SMM Copper Morning Meeting Summary] News: (1) On the first day of the "special" congressional hearing on the US Fed's monetary policy, Fed Chairman Powell stated that due to expectations that tariffs would drive up inflation, the Fed has so far paused interest rate cuts. However, he did not rule out the possibility that the impact of tariffs on inflation might be less than expected, nor did he rule out the possibility of an early interest rate cut.

(2) Strengthen incentives for structural monetary policy tools. Encourage and guide financial institutions to issue loans to various business entities in key service consumption sectors such as wholesale and retail, accommodation and catering, culture, sports, and entertainment, tourism, education, and resident services, to support them in improving the quality and efficiency of service consumption supply. Establish a re-lending facility for service consumption and elderly care with a quota of 500 billion yuan. Loans issued by 21 national financial institutions and 5 urban commercial banks belonging to systemically important financial institutions in key service consumption sectors can apply for re-lending at 100% of the loan principal.

Spot Market: (1) Shanghai: On June 24, SMM #1 copper cathode spot prices against the front-month 2507 contract were reported at parity to a premium of 80 yuan/mt, with an average premium of 40 yuan/mt, down 50 yuan/mt MoM. Looking ahead to today, with inventory clearance and funding needs still present at the end of the quarter, it is expected that spot premiums may continue to fall today.

(2) Guangdong: On June 24, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a discount of 10 yuan/mt to a premium of 70 yuan/mt, with an average premium of 30 yuan/mt, down 30 yuan/mt MoM. Overall, inventory ended a five-day consecutive decline and increased significantly, putting pressure on spot premiums to fall.

(3) Imported Copper: On June 24, warrant prices were $32 to $48/mt, with a QP of July, and the average price remained unchanged MoM. B/L prices were $50 to $68/mt, with a QP of July, and the average price fell by $1/mt MoM. EQ copper (CIF B/L) prices were $4 to $16/mt, with a QP of July, and the average price fell by $1/mt MoM. Quotations were based on cargo arrivals in mid-to-early July. Overall, the spot market was sluggish this week, with both buyers and sellers maintaining a wait-and-see attitude.

(4) Secondary copper: On June 24, the price of secondary copper raw materials remained unchanged MoM. 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 1,100 yuan/mt, up 80 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,000 yuan/mt. According to the SMM survey, many secondary copper rod enterprises currently reflect that due to the price difference between copper cathode and copper scrap, and the price difference between copper cathode rod and secondary copper rod being near the equilibrium line, coupled with the traditional off-season for terminals, it has led to insufficient orders for secondary copper rod enterprises. Secondary copper rod enterprises are suffering losses from finished product sales due to high raw material prices, and the process of policy implementation has left enterprises temporarily unadapted, resulting in generally weak production willingness among enterprises.

(5) Inventory: On June 24, LME copper cathode inventory decreased by 1,200 mt to 94,675 mt; on June 24, SHFE warrant inventory decreased by 3,103 mt to 22,425 mt.

Price: On the macro front, Trump announced a ceasefire between Iran and Israel. After a call between US and Israeli leaders, Israel halted further military strikes on Iran. The Iranian president stated that Iran was ready to engage in dialogue at the negotiating table. The weakening of the US dollar index supported copper prices. Meanwhile, Powell stated that the current policy was in a favorable position, and it could wait and see before considering interest rate adjustments. Moreover, the vast majority of officials believed that an interest rate cut later this year would be appropriate. The US Fed's concerns about future inflation weighed on copper prices in the late trading session. On the fundamental front, suppliers cleared their inventories at low prices, causing premiums to fall. Overall trading sentiment rebounded somewhat. Given the ongoing need to clear inventories and recoup funds, premiums are expected to continue falling today. In summary, although the US dollar index remains weak, the US Fed's statements about inflation concerns are expected to weigh on 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 herein is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and not rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]