Copper concentrates mid-year negotiations concluded, copper prices surged during the macro fundamental resonance period [SMM Copper Morning Meeting Summary]

Futures Market: On Friday evening, LME copper opened at $9,848/mt. After an initial rally, prices fluctuated lower and dipped to $9,823.5/mt before trending upward throughout the session, peaking at $9,883/mt near the close. The contract finally settled at $9,879/mt, down 0.17%, with trading volume reaching 18,000 lots and open interest at 292,000 lots. That evening, the most-traded SHFE copper 2508 contract opened at 79,520 yuan/mt, dipping to 79,500 yuan/mt initially before steadily rising to a session high of 79,990 yuan/mt. It closed at 79,920 yuan/mt, up 0.23%, with trading volume at 39,000 lots and open interest at 213,000 lots.

[SMM Morning Copper Meeting Summary] News: (1) The U.S. International Development Finance Corporation (IDFC) has finalized a $500 million financing package for the Lobito corridor railway project. This infrastructure will transport critical minerals from Central Africa's copper belt to Angola's Atlantic coast port.

Spot Market: (1) Shanghai: On June 30, SMM #1 copper cathode spot prices against the front-month 2507 contract were quoted at a premium of 70-150 yuan/mt, averaging 110 yuan/mt, up 45 yuan/mt from the previous trading day. SMM #1 copper cathode prices stood at 79,970-80,280 yuan/mt. The front-month SHFE copper contract opened higher with a gap, peaking at 80,000 yuan/mt while trading above the daily average line, and hitting 80,160 yuan/mt during morning trade. The backwardation spread remained suppressed near 100 yuan/mt, with SHFE copper import losses widening to approximately 1,400 yuan/mt. Looking ahead, smelters are expected to increase export volumes amid tight spot market liquidity, and suppliers may hold firm on prices at month-start. However, with copper prices approaching 80,000 yuan/mt and weakened downstream buying sentiment, spot premiums are unlikely to see significant upside room today.

(2) Guangdong: On June 30, Guangdong #1 copper cathode spot premiums against the front-month contract were 40-150 yuan/mt (average 95 yuan/mt, +40 yuan/mt day-on-day). SX-EW copper was quoted at discounts of 20-0 yuan/mt (average -10 yuan/mt, +30 yuan/mt day-on-day). Guangdong #1 copper cathode averaged 80,070 yuan/mt (+1,205 yuan/mt), while SX-EW copper averaged 79,965 yuan/mt (+1,195 yuan/mt). Despite suppliers' firm pricing due to three consecutive days of inventory declines, downstream buyers remained reluctant to purchase at elevated prices, resulting in weaker trading activity compared to the previous day.

(3) Imported Copper: On June 30, warrant prices stood at $30-44/mt (July shipment), unchanged day-on-day on average. Bill of Lading (B/L) prices were $40-76/mt (July shipment), down $7/mt on average. EQ copper (CIF basis) was quoted at $0-10/mt (July shipment), down $4/mt on average, with offers referencing cargoes arriving in early to mid-July. The SHFE/LME price ratio collapsed sharply, with spot losses against the SHFE copper 2507 contract widening to 3,000 yuan/mt, and July contract losses against SHFE copper 2507 expanding to 1,400 yuan/mt. Some traders were reportedly considering shipping domestic warrants to Europe to exchange for locally registered CME-brand copper cathode.

(4) Secondary copper: On June 30, secondary copper raw material prices rose 500 yuan/mt MoM. Guangdong bare bright copper prices stood at 73,300-73,500 yuan/mt, up 500 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap reached 1,965 yuan/mt, widening by 513 yuan/mt MoM, while the price difference between copper cathode rod and secondary copper rod was 1,410 yuan/mt. According to SMM survey, despite rapidly rising copper prices, overseas secondary copper raw material supply did not increase, preventing suppliers from lowering quotation coefficients. European secondary copper raw material suppliers' quotation coefficients remained unchanged MoM this week.

(5) Inventories: LME copper cathode inventory fell 1,800 mt to 91,275 mt on June 30, while SHFE warrant inventory rose 1,650 mt to 25,346 mt.

Prices: On the macro front, Trump announced that a ceasefire agreement between Iran and Israel was near completion and could be reached within a week, causing the US dollar index to plunge and turn negative, with copper prices first declining then rebounding. Separate reports suggested Trump might appoint a successor to Powell in the coming months, exacerbating US dollar weakness and supporting copper prices. Fundamentally, from the supply side, smelters plan to increase export efforts, tightening spot market availability. On the demand side, despite high spot premiums opening firmly and trading stabilizing at elevated levels, transactions were dominated by traders while downstream purchasing was constrained by high copper prices. Limited upside room is expected for spot premiums at current levels. Regarding prices, Trump indicated the July 9 trade negotiation deadline was not fixed, and if no agreement is reached, the US would reimpose broader tariffs. Trade policy uncertainty continues to disrupt markets, though short-term US dollar weakness should bolster copper prices.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution and avoid substituting independent judgment with this content. Any decisions made by clients are unrelated to SMM.]