The LME Hong Kong delivery warehouse was officially put into use, with a significant increase in inventory yesterday [SMM Copper Morning Meeting Minutes]

Futures market: Overnight, LME copper opened at $9,610/mt, fluctuating rangebound in early trading before hitting a low of $9,588/mt. It then surged sharply to a high of $9,664/mt before pulling back and rising again, ultimately closing at $9,637/mt, down 0.21%. Trading volume reached 17,000 lots, while open interest stood at 268,000 lots. Overnight, the most-traded SHFE copper 2508 contract opened at 77,810 yuan/mt, edged up slightly before retreating to a low of 77,770 yuan/mt. It then rallied sharply to a high of 78,090 yuan/mt before pulling back and climbing again to form an "M" pattern, eventually closing at 77,950 yuan/mt, up 0.01%. Trading volume reached 22,000 lots, while open interest stood at 158,000 lots.
[SMM Copper Morning Briefing] News: (1) Rio Tinto's Q2 2025 copper production reached 229,000 mt, up 15% YoY and 9% MoM. The company's 2025 copper production guidance stands at 780,000-850,000 mt. Due to the continued successful ramp-up at the Oyu Tolgoi underground mine and strong performance at Escondida, output is expected to hit the upper end of the guidance range.
Spot market: (1) Shanghai: On July 16, SMM #1 copper cathode spot prices against the front-month 2508 contract were at a premium of 70-120 yuan/mt, averaging 95 yuan/mt, down 40 yuan/mt from the previous day. SMM #1 copper cathode prices ranged from 77,970-78,150 yuan/mt. SHFE copper started falling from 78,080 yuan/mt in early trading, continuing to decline during the morning session before rebounding after repeatedly testing the 77,900 yuan/mt level. Prices recovered to 78,030 yuan/mt near the morning close. The price spread between futures contracts remained basically flat, with import losses for SHFE front-month copper at around 500 yuan/mt. With warrants failing to flow out substantially during delivery, spot prices are expected to remain firm tomorrow, though brand premiums may widen further, while transaction prices in Changzhou could decline.
Guangdong: On July 16, Guangdong #1 copper cathode spot prices against the front-month contract were at a premium of 20-100 yuan/mt, averaging 60 yuan/mt, up 55 yuan/mt from the previous day. SX-EW copper traded at a discount of 40-20 yuan/mt, averaging a 30 yuan/mt discount, up 60 yuan/mt from the previous day. The average price for Guangdong #1 copper cathode was 78,070 yuan/mt, up 30 yuan/mt, while SX-EW copper averaged 77,980 yuan/mt, up 35 yuan/mt. Overall, available supply decreased noticeably, with suppliers refusing to budge on prices, pushing premiums higher today.
(3) Imported copper: On July 16, warrant prices ranged from $44-56/mt, QP August, averaging flat from the previous day. B/L prices were at $56-76/mt, QP August, averaging flat, while EQ copper (CIF B/L) traded at $22-36/mt, QP July, averaging flat. Offers referenced late July and early August arrivals. Overall, the SHFE/LME price ratio pulled back slightly from the previous day, with suppliers showing wait-and-see sentiment and few offers available.
(4) Secondary copper: On July 16, the price of recycled copper raw materials remained flat MoM. The price of bare bright copper in Guangdong was 72,600-72,800 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap widened to 785 yuan/mt, up 240 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod stood at 520 yuan/mt. According to the SMM survey, as copper prices continued to consolidate at low levels, during the quotation period for recycled copper raw materials, many traders raised their selling prices by 100 yuan/mt as futures prices rose nearly 300 yuan/mt from the previous day. However, secondary copper rod enterprises kept their quotations unchanged. Moreover, the decline in copper prices weakened demand for secondary copper rods, making enterprises reluctant to accept high-priced raw materials in the market.
(5) Inventory: On July 16, LME copper cathode inventories increased by 10,525 mt to 121,000 mt. SHFE warrant inventories rose by 109 mt to 50,242 mt on the same day.
Prices: Macro-wise, Trump denied rumors about firing Fed Chairman Powell while again criticizing Powell for failing to cut interest rates. The US dollar index plunged intraday and eventually closed lower, weighing on copper prices. Additionally, Trump stated he would send tariff letters to over 150 countries, with rates potentially set uniformly at 10% or 15%, further advancing his trade agenda, keeping tariff uncertainties alive. Fundamental-wise, standard-quality copper remained in tight supply, while some high-quality copper replenishments emerged. SX-EW copper stayed scarce, and warrants failed to flow out in large volumes during the delivery period, keeping overall supply tight. Demand side, suppliers continued to quote high premiums during the day, but SHFE copper fell in early trading, rebounding after a sustained decline in the morning session, with market sentiment affected by price fluctuations. Price-wise, current macro and fundamental bearish factors are causing disturbances, suggesting upward pressure on copper prices today.
[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]