Tariff disruptions have led to downward pressure on copper prices, with the inversion of the price spread between SHFE copper and BC copper showing contraction [SMM BC Copper Commentary]

Today, the most-traded BC copper 2508 contract opened at 70,810 yuan/mt and closed in the red, with bulls reducing their positions. During the night session, the most-traded BC copper contract fluctuated considerably initially, reaching an intraday high of 71,340 yuan/mt, before plummeting straight down and fluctuating downward unilaterally. It touched a low of 69,490 yuan/mt near the end of the session and finally closed at 69,590 yuan/mt, down 1.56%. The open interest reached 4,544 lots, a decrease of 457 lots from the previous trading day, and the trading volume reached 11,030 lots. On the macro side, Trump clarified that the 50% tariff on imported copper would be implemented starting August 1st without any extension. US Secretary of Commerce Lutnick also stated that 15 to 20 tariff-related letters would be sent out in the next two days, with the specific implementation time of the tariffs likely to be from late July to August 1st. The tariff policy has disrupted the market, leading to a rise in risk-aversion sentiment and a continued expansion of the decline in SHFE copper prices, driving the downward trend of BC copper. From a fundamental perspective, under the backdrop of high tariffs, copper not shipped to the US may be redirected to non-US regions, potentially alleviating the tight supply situation in non-US markets. Coupled with weak downstream demand during the off-season, this collectively exerts downward pressure on copper prices.

The most-traded SHFE copper 2508 contract closed at 78,400 yuan/mt. If based on the most-traded BC copper 2508 contract price of 69,590 yuan/mt, its after-tax price would be 78,637 yuan/mt. The price spread between the SHFE copper 2508 contract and the BC copper contract is -237, maintaining an inversion and narrowing compared to the previous day.