US CPI rises significantly, exceeding expectations; overnight copper prices stop falling and stabilize [SMM Copper Morning Meeting Summary]

Futures market: Overnight LME copper opened at $9,635.5/mt, initially fluctuated downward to hit a session low of $9,598/mt, then steadily climbed upward and reached a session high of $9,657.5/mt near the close, finally closing at $9,657.5/mt with a 0.15% gain. Trading volume reached 15,000 lots, and open interest stood at 279,000 lots. Overnight SHFE copper's most-traded 2508 contract opened at 77,960 yuan/mt, initially dipped to a session low of 77,810 yuan/mt, then oscillated upward and touched a session high of 78,160 yuan/mt near the close before pulling back slightly to close at 78,070 yuan/mt, up 0.18%. Trading volume reached 21,000 lots, and open interest stood at 168,000 lots.
[SMM Copper Morning Briefing] News: (1) US June core CPI rose 2.9% YoY (vs est. 2.9%) and 0.2% MoM (vs est. 0.3%).
Spot market: (1) Shanghai: On July 15, SMM #1 copper cathode spot premiums against the SHFE copper 2507 contract were reported at a premium of 90-180 yuan/mt, with an average premium of 135 yuan/mt, up 155 yuan/mt from the previous trading day. SMM #1 copper cathode prices stood at 77,770-78,220 yuan/mt. July 15 marked the last trading day for the SHFE copper 2507 contract, with SMM maintaining quotes against the front-month contract per methodology. The front-month spread fluctuated between Contango 40 yuan/mt and Backwardation 20 yuan/mt. The SHFE copper 2507 contract hovered between 78,020-78,060 yuan/mt in the morning session before sliding to 77,650 yuan/mt and rebounding to around 77,800 yuan/mt near the midday close. After switching to the SHFE copper 2508 contract, suppliers are expected to start quoting from a premium of 150 yuan/mt. However, given low carrying costs before contract rollover and weak downstream consumption sentiment, Shanghai spot copper premiums are projected to weaken rapidly.
(2) Guangdong: On July 15, Guangdong #1 copper cathode spot premiums against the front-month contract were reported at a discount of 40 yuan/mt to a premium of 50 yuan/mt, with an average premium of 5 yuan/mt, up 35 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 100-80 yuan/mt, with an average discount of 90 yuan/mt, up 70 yuan/mt from the previous trading day. Guangdong #1 copper cathode averaged 78,040 yuan/mt (-385 yuan/mt), while SX-EW copper averaged 77,945 yuan/mt (-350 yuan/mt). Overall, spot premiums rose sharply as narrowing calendar spreads encouraged suppliers to hold firm on prices.
(3) Imported copper: On July 15, warrant prices stood at $40-50/mt (QP July), averaging $5/mt higher than the previous day. B/L prices stood at $50-74/mt (QP August), averaging $3/mt lower, while EQ copper (CIF B/L) stood at $14-30/mt (QP August), averaging $4/mt higher, with quotes referencing mid-to-late July arrivals. In summary, B/L price spreads narrowed, warrant-B/L inversion weakened, and EQ B/L prices remained firm.
(4) Secondary Copper: On July 15, secondary copper raw material prices fell 300 yuan/mt MoM, with Guangdong bare bright copper prices at 72,600-72,800 yuan/mt, down 300 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap stood at 545 yuan/mt, narrowing 305 yuan/mt MoM, while the price difference between copper cathode rod and secondary copper rod was 370 yuan/mt. According to SMM survey, copper prices fluctuated at lows amid futures delivery day, resulting in mediocre trading activity in the secondary copper raw material market. Suppliers' refusal to budge on prices further squeezed the cathode-scrap price spread.
(5) Inventories: On July 15, LME copper cathode inventories rose 850 mt to 110,475 mt; SHFE warrant inventories increased 15,754 mt to 50,133 mt on the same day.
Prices: Macro drivers include US June CPI posting the largest MoM gain in five months, with tariffs potentially fueling inflation, though overall US stagflation risks weighing on US dollar bullishness toward copper. Meanwhile, Trump's Russia sanctions with a 50-day grace period eased immediate supply disruption fears, extending oil price declines, though OPEC maintains "very robust" Q3 oil demand expectations, supporting copper prices. Fundamentals show supply-side pressures as the final trading day for SHFE copper 2507 contract approached, with suppliers' quoting enthusiasm dampened by contract rollover impacts. Demand-side sentiment remains weak despite suppliers adjusting premium offers, failing to boost transactions. US Treasury Secretary's positive remarks on China-US trade talks and ongoing tariff developments suggest limited upside room for copper prices today.
[The provided information is for reference only and does not constitute direct investment research advice. Clients should exercise independent judgment, and any decisions made shall not be attributed to SMM.]