The US government's tariff contradictions intensify, putting continuous pressure on copper prices [SMM Copper Morning Meeting Summary]

Futures market: Overnight LME copper opened at $9,609/mt, dipped to $9,575/mt in early trading, then fluctuated upward and peaked at $9,649/mt near the close, finally settling at $9,643.5/mt with a 0.2% loss. Trading volume reached 21,000 lots and open interest stood at 280,000 lots. Overnight, the most-traded SHFE copper 2508 contract opened at 77,900 yuan/mt, dipped to 77,810 yuan/mt in early trading, consolidated sideways, then edged higher to peak at 78,160 yuan/mt near the close, settling at 78,020 yuan/mt with a 0.34% loss. Trading volume reached 31,000 lots and open interest stood at 172,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) Chile's Codelco reported a 9% YoY increase in H1 copper production and aims to restore pre-pandemic output levels in coming years. Codelco's production fell to a 25-year low due to declining ore grades and operational/project setbacks, threatening its status as the world's top supplier. Production recovery hinges on advancing delayed and over-budget projects to exploit richer zones in aging minesZ3/>Spot market: (1) Shanghai: On July 14, SMM #1 copper cathode spot prices against the front-month 2507 contract were quoted at a discount of 60 yuan/mt to a premium of 20 yuan/mt, averaging a discount of 20 yuan/mt, up 5 yuan/mt from the previous session. SMM #1 copper cathode prices ranged between 78,370-78,540 yuan/mt. Morning futures climbed from near 78,300 yuan/mt to above 78,500 yuan/mt, peaking at 78,550 yuan/mt near midday. With narrowing calendar spreads, suppliers anticipate firm offers tomorrow, mostly quoting against the 2508 contract with premiums expected to start at 150-200 yuan/mt.

(2) Guangdong: On July 14, Guangdong #1 copper cathode spot prices against the front-month contract were quoted at a discount of 110 yuan/mt to a premium of 50 yuan/mt, averaging a discount of 30 yuan/mt (unchanged from the previous session). SX-EW copper was quoted at a discount of 170-150 yuan/mt, averaging 160 yuan/mt (unchanged). Guangdong #1 copper cathode averaged 78,425 yuan/mt (-325 yuan/mt day-on-day), while SX-EW copper averaged 78,295 yuan/mt (-325 yuan/mt). Overall, lower copper prices and narrowing calendar spreads boosted downstream purchasing activity, with trading volumes improving from last Friday.

(3) Imported copper: On July 14, warrant prices stood at $40-54/mt (QP July), averaging $2/mt higher day-on-day. B/L prices stood at $50-76/mt (QP August), averaging $1/mt higher. EQ copper (CIF B/L) was quoted at $18-30/mt (QP August), averaging $2/mt higher. Prices referenced shipments arriving mid to late July. Overall, market liquidity significantly improved after LME copper shifted to a contango structure.

(4) Secondary Copper: On July 14, secondary copper raw material prices fell by 100 yuan/mt MoM. Guangdong bare bright copper prices stood at 72,900-73,100 yuan/mt, down 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 850 yuan/mt, narrowing by 19 yuan/mt MoM, while the price spread between copper cathode rod and secondary copper rod reached 545 yuan/mt. According to SMM survey, despite copper prices continuing to edge lower, many suppliers maintained firm quotations for high-grade secondary copper raw materials. Some large scrap yards even reported that their dockside selling prices for copper cable scrap (Cu＞99.5%) exceeded their own purchase prices, making such quotes unacceptable to most scrap yards unless they held short positions requiring procurement of high-priced secondary copper.

(5) Inventories: On July 14, LME copper inventories rose by 900 mt to 109,625 mt; SHFE warrant inventories increased by 11,072 mt to 34,379 mt.

Prices: On the macro front, Trump threatened to impose 100% secondary tariffs on Russia if no Ukraine peace deal is reached within 50 days, potentially disrupting global oil supply/demand dynamics. This uncertainty triggered a sharp decline in international oil prices, weighing on copper prices. Fundamentally, supply-side participants showed strong selling sentiment, though suppliers refrained from further quote reductions amid narrowing price spreads between futures contracts. Demand-side buying sentiment weakened compared to late last week, with procurement enthusiasm pulling back. As of Monday, July 14, SMM's national copper inventory across major regions rose by 3,900 mt WoW to 147,600 mt. Regional inventory changes since last Thursday showed widespread increases except in Shanghai. Regarding pricing, Trump renewed criticism of Powell, advocating for 1% or lower interest rates, but Fed officials stated no urgent need for rate cuts. The US dollar strengthened against major currencies on Monday, maintaining pressure on copper prices.

[Information provided is for reference only. This document does not constitute direct investment research advice. Clients should exercise caution, avoid relying solely on this analysis, and make independent judgments. Any decisions made by clients bear no relation to SMM.]