Copper prices rebound from low levels, with demand response turning sensitive and then weakening [SMM Copper Morning Meeting Summary]

Futures market: LME copper opened at $9,729/mt last Friday night, initially fluctuating rangebound and testing the low of $9,710/mt before gradually moving higher and probing $9,799/mt near the session close, eventually settling at $9,794.5/mt, up 1.2%. Trading volume reached 15,000 lots, while open interest stood at 266,000 lots. The most-traded SHFE copper 2509 contract opened at 78,560 yuan/mt last Friday night, initially dipping to 78,530 yuan/mt before rallying steadily to probe 79,190 yuan/mt near the session close, finally settling at 79,140 yuan/mt, up 1.03%. Trading volume reached 32,000 lots, while open interest stood at 146,000 lots.

[SMM Copper Morning Briefing] News: (1) The national export control coordination mechanism office organized a meeting in Nanning, Guangxi, with participation from the Ministry of Commerce, Ministry of Public Security, Ministry of State Security, General Administration of Customs, State Post Bureau, Supreme People's Court, and Supreme People's Procuratorate, to summarize progress and analyze the current anti-smuggling situation regarding strategic minerals, while further deploying and advancing the special crackdown campaign.

(2) On copper, Trump plans to impose a 50% tariff starting August 1, which would throw the spot market into chaos and create arbitrage opportunities as high as $3,000/mt. US warehouse inventories are surging as imports flood into New Orleans.

Spot market: (1) Shanghai: On July 18, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 100-250 yuan/mt, averaging 175 yuan/mt, up 70 yuan/mt MoM. Looking ahead, if smelters replenish Shanghai warehouses promptly over the weekend, tightness may ease; otherwise, brand shortages for delivery may persist early this week.

(2) Guangdong: On July 18, Guangdong #1 copper cathode spot prices against the front-month contract were at premiums of 10-80 yuan/mt, averaging 45 yuan/mt, down 20 yuan/mt MoM. Overall, despite lower inventories, substantial warrant outflows pressured spot premiums downward.

(3) Secondary copper: On July 18, recycled copper raw material prices rose 300 yuan/mt MoM. Guangdong bare bright copper prices ranged 72,900-73,100 yuan/mt, up 300 yuan/mt from the previous day. The price difference between copper cathode and copper scrap stood at 665 yuan/mt, down 120 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 705 yuan/mt. According to SMM survey, secondary copper raw material traders reported overseas offer coefficients have persisted for over a month, with procurement volumes declining consecutively, down 50% MoM in July.

(4) Inventories: On July 18, LME copper cathode inventories increased by 25 mt to 122,175 mt; SHFE warrant inventories decreased by 3,900 mt to 38,239 mt.

Prices: Macro perspective, Besant continued to dissuade Trump from dismissing Powell, while Trump insisted he needed no explanation of Powell's pros and cons. Waller remained ambiguous about the July meeting stance but expressed willingness to assume leadership at the US Fed if nominated by the president. The US Commerce Secretary stated a potential agreement with the EU, while imposing a 10% baseline tariff on smaller countries starting August 1. Domestically, MIIT will issue a new round of nonferrous metals growth stabilization plans to promote high-quality development in copper, aluminum, and gold industries, providing a floor for copper prices. Fundamentally, LME inventory showed consecutive minor rebounds but remained at historically low levels. Demand side weakened significantly with the price rebound, coupled with traditional off-season effects, resulting in a temporary dual weakness in supply and demand. Comprehensive assessment suggests tariffs and US Fed personnel disputes pose short-term volatility risks, but domestic policy support and low inventory provide downside support for copper prices.

[The provided information is for reference only. This article does not constitute direct investment research advice. Clients should exercise caution in decision-making and not replace independent judgment. Any decisions made by clients are unrelated to SMM.]

[The above information is based on market collection and comprehensive evaluation by SMM Research Team. The information provided herein is for reference only. This article does not constitute direct investment research advice. Clients should exercise caution in decision-making and not replace independent judgment. Any decisions made by clients are unrelated to SMM.]