US initiates a new round of tariff disputes; LME copper edges down overnight [SMM Copper Morning Meeting Summary]

Futures: On Friday night, LME copper opened at $9,618/mt, initially dipping to $9,610/mt before fluctuating upward throughout the session. It peaked at $9,694/mt near the close and settled at $9,663/mt, down 0.2%, with trading volume reaching 20,000 lots and open interest at 281,000 lots. That evening, the most-traded SHFE copper 2508 contract opened and dipped to 78,040 yuan/mt, later rallying to a session high of 78,460 yuan/mt before pulling back slightly to close at 78,320 yuan/mt, down 0.27%, with trading volume at 28,000 lots and open interest at 175,000 lots.

[SMM Morning Copper Meeting Summary] News: (1) Canadian copper producer Hudbay Minerals announced Thursday it had temporarily suspended operations at Snow Lake due to wildfires in northern Manitoba.

Spot: (1) Shanghai: On July 11, SMM #1 copper cathode spot prices were quoted at a discount of 70 yuan/mt to a premium of 20 yuan/mt against the front-month 2507 contract, averaging a discount of 25 yuan/mt, down 40 yuan/mt from the previous trading day. SMM #1 copper cathode prices stood at 78,640-78,800 yuan/mt. In the morning session, SHFE copper briefly touched 78,830 yuan/mt before retreating, with notable open interest reduction sending prices to a low of 78,560 yuan/mt during the day. The backwardation between nearby contracts continued narrowing, prompting arbitrageurs to unwind positions. Looking ahead, with widening month-end spreads, suppliers are expected to prioritize cargo sales, and spot discounts may drive increased warrant issuance next week.

(2) Guangdong: On July 11, Guangdong #1 copper cathode spot prices were quoted at a discount of 110 yuan/mt to a premium of 50 yuan/mt against the front-month contract, averaging a discount of 30 yuan/mt, down 5 yuan/mt from the previous day. SX-EW copper was quoted at discounts of 170-150 yuan/mt, averaging 160 yuan/mt discount, down 10 yuan/mt. Guangdong #1 copper cathode averaged 78,750 yuan/mt, up 210 yuan/mt, while SX-EW copper averaged 78,620 yuan/mt, up 205 yuan/mt. Overall, downstream buyers reduced procurement after brief restocking, forcing suppliers to lower premiums, resulting in weaker trading activity compared to the previous day.

(3) Imported copper: On July 11, warrant prices stood at $40-50/mt (QP July), unchanged from the previous session, while B/L prices were $50-74/mt (QP August). EQ copper (CIF B/L) was quoted at $14-30/mt (QP August), also unchanged, with pricing referencing mid-to-late July arrivals. The B/L spread narrowed overall, with reduced warrant-B/L inversion and firm EQ B/L pricing.

(4) Secondary copper: On July 11, secondary copper raw material prices remained unchanged MoM. Guangdong bare bright copper was quoted at 73,000-73,200 yuan/mt, unchanged from the previous session, with a copper cathode-scrap price difference of 869 yuan/mt, narrowing by 20 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod stood at 620 yuan/mt. According to the SMM survey, secondary copper raw material import traders indicated tight supply and high prices in Europe currently, while US supply had to halt purchases due to the 10% import tariff. Furthermore, starting from July this year, Uzbekistan officially imposed a 100% tariff on scrap metal exports (including copper scrap). Amid the current global copper scrap supply shortage, Chinese import traders need to continue exploring overseas markets to meet domestic demand for secondary copper raw materials.

(5) Inventory: On July 11, LME copper cathode inventory rose by 625 tons to 108,725 tons; on July 11, SHFE warrant inventory increased by 1,578 tons to 23,307 tons.

Price: On the macro front, Trump threatened last Saturday to impose 30% tariffs on imports from Mexico and the EU starting August 1, independent of industry-wide tariffs. The successive letters indicate Trump has resumed the aggressive trade stance adopted in April. Meanwhile, US Fed officials stated the latest tariff threats might delay interest rate cuts, intensifying market risk aversion and weighing on copper prices. Fundamentally, the supply side showed relatively loose conditions ahead of delivery, with suppliers holding ample inventory and the import window remaining open. On the demand side, copper prices stopped falling and rebounded last Thursday, prompting downstream restocking at lower prices, though purchasing sentiment weakened significantly by Friday. Regarding prices, as Trump shows no signs of slowing the trade war and copper tariffs could be implemented swiftly, downward pressure on copper prices is expected to persist today.

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