Weak supply and demand only provide weak support for copper prices [SMM Copper Morning Meeting Summary]

Futures market: LME copper opened at $9,851/mt overnight, fluctuated downward to test the low of $9,841/mt at the beginning of the session, then the center of copper prices moved straight up to probe $9,871/mt, followed by considerable fluctuations before finally closing at $9,867/mt, up 0.74%, with trading volume at 14,000 lots and open interest at 266,000 lots. The most-traded SHFE copper 2509 contract opened at 79,720 yuan/mt overnight, fluctuated downward to test the low of 79,540 yuan/mt at the beginning of the session, then the center of copper prices gradually moved up to probe the high of 79,840 yuan/mt, before finally closing at 79,770 yuan/mt, up 0.64%, with trading volume at 28,000 lots and open interest at 161,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) US Treasury Secretary Bescent, in his latest speech, called for a comprehensive review of the US Fed system and emphasized that trade negotiations would prioritize quality over deadlines. On Monday, Bescent criticized the Fed's "panic propaganda" on tariffs in a media interview, pointing out that tariffs have had almost no inflationary effect so far. He declined to comment on reports suggesting Trump not fire Fed Chairman Powell, but stressed the need to review whether the Fed has successfully fulfilled its duties.

(2) Bescent made it clear that the Trump administration focuses more on the quality of trade agreements than the time period, stating that they would not rush to reach an agreement before the August 1 deadline, believing that higher tariffs would put more pressure on relevant countries to propose better terms.

Spot market: (1) Shanghai: On July 21, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 150-290 yuan/mt, with the average premium at 220 yuan/mt, up 45 yuan/mt from the previous trading day. Looking ahead, Shanghai destocking exceeded 15,000 mt over the weekend, with mainstream supply further tightening and domestic replenishment failing to arrive in time. It is expected that mainstream parity transactions will remain firm in the first half of the week.

(2) Guangdong: On July 21, Guangdong #1 copper cathode spot prices against the front-month contract were at discounts of 20 yuan/mt to premiums of 50 yuan/mt, with the average premium at 15 yuan/mt, down 30 yuan/mt MoM. Overall, copper prices rose sharply, making downstream purchases cautious, while spot premiums declined, resulting in generally moderate trading activity.

(3) Imported copper: On July 21, warrant prices were at $44-54/mt, QP August, with the average price flat MoM; B/L prices were at $56-76/mt, QP August, with the average price up $1/mt MoM; EQ copper (CIF B/L) was at $22-36/mt, QP July, with the average price up $1/mt MoM. Quotations referred to cargoes arriving in late July and early August. Overall, spot market offers remained scarce, but buyers were actively seeking goods.

(4) Secondary copper: On July 21, the price of recycled copper raw materials rose 500 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,400-73,600 yuan/mt, up 500 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap stood at 1,479 yuan/mt, widening 514 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 935 yuan/mt. According to the SMM survey, the rapid rise in copper prices undoubtedly signaled suppliers' willingness to actively sell recycled copper raw materials. Although many secondary copper rod enterprises reported significantly improved procurement volumes of recycled copper raw materials today, the persistently high raw material prices coupled with ongoing sales losses have prompted some companies to consider production cuts or even shutdowns.

(5) Inventory: On July 22, LME copper cathode inventories decreased by 100 mt to 122,075 mt. SHFE warrant inventories dropped by 10,062 mt to 28,177 mt on the same day.

Prices: Macro perspective, the EU is considering potential countermeasures against US tariffs but prioritizes diplomatic negotiations, easing market concerns about a sharp escalation in trade conflicts. The White House denied rumors of "firing Powell," while Republican lawmakers sent a letter to the Justice Department regarding perjury allegations, weighing on the US dollar index and supporting copper prices. Fundamental side, both imported copper and domestic copper arrivals remained low this week, coupled with strong downstream cargo pick-up and good outflows from warehouses. As of Monday, July 21, SMM's national mainstream copper inventories declined to 118,600 mt. Demand side, downstream purchasing sentiment gradually weakened after copper prices stopped falling and rebounded, creating a situation of weak supply and demand that provides some support for copper prices.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

[The above information is based on market collection and comprehensive evaluation by SMM's research team. The information provided in this article is for reference only. This article does not constitute direct investment research advice. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]