LME copper edges down, SHFE copper weakens; tariff shadow weighs on copper prices [SMM Morning Copper Comment]

SMM News on July 10: Overnight, LME copper opened at $9,610.5/mt. After briefly dipping to $9,601/mt in the early session, it fluctuated upward, touching a high of $9,673/mt. Subsequently, the center of copper prices gradually pulled back, closing at $9,660/mt, down 0.05%. Trading volume reached 38,000 lots, and open interest stood at 279,000 lots. Overnight, SHFE copper opened at 78,340 yuan/mt, immediately surging to 78,530 yuan/mt in the early session. It then fluctuated downward, bottoming out at 78,160 yuan/mt. In the tail end of the session, it rebounded slightly, closing at 78,330 yuan/mt, down 0.74%. Trading volume reached 35,000 lots, and open interest stood at 190,000 lots. On the macro front, Trump sent tariff letters to eight countries, including Brazil (with a potential 50% tariff). Trump again expressed on social media platforms his intention to impose a 50% tariff on imported copper, effective from August 1, 2025. Increasing copper tariffs would make the spot copper market in non-US regions relatively loose, thereby putting pressure on copper prices. Meanwhile, the June minutes of the US Fed showed that officials had differing views on the impact of tariffs on inflation, ruling out an interest rate cut in July. Policy uncertainty suppressed risk appetite, jointly putting pressure on copper prices. On the fundamental front, yesterday's intraday decline in copper prices stimulated some downstream buying the dip, leading to a slight rebound in trading volume. However, most downstream users, based on expectations of a bearish outlook for copper prices, still adopted a cautious wait-and-see approach in their overall procurement strategies. In summary, the current macro environment faces pressure from trade flow adjustments brought about by high tariffs, coupled with macro uncertainties triggered by the US Fed's policy expectations. Fundamentals have improved supply due to potential cargo transfers, while being constrained by high copper prices and bearish expectations. Downstream demand response is weak, presenting a pattern of "expected supply easing and weak actual demand". It is expected that copper prices will encounter resistance above today.