US dollar index weakens, providing support for copper prices [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,692.5/mt, reached a high of $9,738.0/mt, a low of $9,684/mt, and finally closed at $9,727.0/mt, up 0.65%. Trading volume reached 14,874 lots, and open interest stood at 286,436 lots. The overall trend fluctuated initially and then fluctuated upward, with a pullback after a late-session surge. Overnight, the SHFE copper 2508 contract opened at 78,600 yuan/mt, reached a high of 78,740 yuan/mt, a low of 78,510 yuan/mt, and finally closed at 78,720 yuan/mt, up 0.36%. Trading volume reached 25,683 lots, and open interest stood at 175,229 lots. The overall trend fluctuated, surging initially, pulling back, and then rising again, showing a fluctuating upward trend.

[SMM Copper Morning Meeting Summary] News: (1) Regarding the policies of the Trump administration, Powell stated that the updated forecasts in the Summary of Economic Projections (SEP) released by the US Fed after last week's meeting partly reflected the impact of trade policies. However, with high tariffs that have no precedent, it is difficult to predict how they will affect inflation. During periods of uncertainty, it is reasonable to proceed more slowly with monetary policy. Regarding inflation, Powell stated that stagflation is not a basic assumption for the US economy, but the US Fed is monitoring prices in the US. Over time, regulation will also contribute to a slowdown in inflation.

(2) The EU warned that it would take retaliatory action if the US insists on imposing benchmark tariffs on EU goods. Despite accelerated negotiations, the EU believes that the US demands are unfair, particularly the 10% benchmark tariffs. The aviation industry may become a focus of retaliation, with Airbus facing unfair competition.

Spot Market: (1) Shanghai: On June 25, SMM #1 copper cathode spot prices were reported at parity to a premium of 80 yuan/mt against the front-month 2507 contract, with an average premium of 40 yuan/mt, down 50 yuan/mt MoM. Looking ahead to today, with quarter-end inventory clearance and funding needs still present, it is expected that spot premiums may continue to fall today.

(2) Guangdong: On June 25, Guangdong #1 copper cathode spot prices were reported at a discount of 30 yuan/mt to a premium of 50 yuan/mt against the front-month contract, with an average premium of 10 yuan/mt, down 20 yuan/mt MoM. Overall, despite inventory levels falling again, suppliers are still lowering prices to sell, and market trading is sluggish.

(3) Imported Copper: On June 25, warrant prices ranged from $32 to $48/mt, with a prompt date (QP) of July, and the average price remained unchanged MoM. B/L prices ranged from $50 to $68/mt, with a QP of July, and the average price fell by $1/mt MoM. EQ copper (CIF B/L) prices ranged from $4 to $16/mt, with a QP of July, and the average price fell by $1/mt MoM. Prices are quoted with reference to cargo arrivals in mid-to-late 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 25, the price of secondary copper raw materials rose by 100 yuan/mt MoM. The price of bare bright copper in Guangdong was 72,700-72,900 yuan/mt, up 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,173 yuan/mt, up 73 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,135 yuan/mt. According to the SMM survey, as copper prices rebounded, the price spread between copper cathode rod and secondary copper rod widened. Secondary copper rod enterprises reported that orders were recovering. However, due to continued losses from sales, they did not take on excessive orders.

(5) Inventory: On June 25, LME copper cathode inventories decreased by 1,200 mt to 93,475 mt. On the same day, SHFE warrant inventories decreased by 955 mt to 21,470 mt.

Price: On the macro front, Trump announced that he believed the war between Israel and Iran had ended, and that the US would hold talks with Iran next week, not considering a nuclear agreement necessary. This alleviated market risk aversion sentiment. Additionally, the market widely expected the US Fed to soon resume its interest rate cut cycle, causing the US dollar index to decline and supporting copper prices. On the fundamental front, most enterprises gradually completed their inventory clearance plans, and currently, the market has limited available supply. It is expected that the prices of some scarce supplies will rise today. Overall, with the significant decline in the US dollar, copper prices are expected to be supported 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 solely on this information for independent judgment. Any decisions made by clients are unrelated to SMM.]