A new round of China-US trade talks is imminent, and copper prices hold up well [SMM Copper Morning Meeting Summary]

Futures market: LME copper opened at $9,940/mt overnight, fluctuated downward to $9,914.5/mt in early trading, then fluctuated considerably to a high of $9,946.5/mt before consolidating sideways and finally closing at $9,933.5/mt, up 0.36%, with trading volume at 15,000 lots and open interest at 265,000 lots. The most-traded SHFE copper 2509 contract opened at 79,880 yuan/mt overnight, touched a high of 80,020 yuan/mt initially, then gradually moved downward with its price center approaching the session low of 79,660 yuan/mt near the close, finally settling at 79,680 yuan/mt, down 0.16%, with trading volume at 30,000 lots and open interest at 175,000 lots.

[SMM Copper Morning Briefing] News: (1) On Wednesday, July 23, US Eastern Time, media cited informed sources saying the US and EU are close to reaching an agreement under which the US would impose a 15% tariff on the EU, similar to the trade deal reached with Japan this week. The EU may accept such reciprocal tariffs to avoid facing higher tariffs recently threatened by US President Trump. According to CCTV News, Trump announced on July 12 that 30% tariffs would be imposed on goods imported from the EU starting August 1.

(2) When responding to media inquiries about China-US-Sweden economic and trade talks, a spokesperson for China's Ministry of Commerce stated that, as agreed by China and the US, He Lifeng, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will travel to Sweden from July 27 to 30 for economic and trade talks with the US side. Both sides will act on the important consensus reached by the two heads of state during their June 5 phone call, make good use of the China-US economic and trade consultation mechanism, and continue consultations on issues of mutual concern based on the principles of mutual respect, peaceful coexistence, and win-win cooperation.

Spot market: (1) Shanghai: On July 23, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 120-240 yuan/mt, with the average at 180 yuan/mt, down 60 yuan/mt MoM. Today, copper prices remain high with downstream enterprises purchasing as needed. Under the current contango structure, suppliers are reluctant to offer at excessively low premiums. Spot premiums are expected to see only minor adjustments from yesterday's levels.

(2) Guangdong: On July 23, Guangdong #1 copper cathode spot prices against the front-month contract ranged from discounts of 50 yuan/mt to premiums of 30 yuan/mt, averaging a discount of 10 yuan/mt, flat MoM. Overall, downstream enterprises remained bearish on copper prices and unwilling to increase purchases, resulting in muted trading yesterday, with spot premiums unchanged from the previous day.

(3) Imported copper: On July 23, warrant prices were $44-54/mt, QP August, with the average flat MoM; B/L prices were $56-76/mt, QP August, with the average flat MoM; EQ copper (CIF B/L) was $22-36/mt, QP July, with the average flat MoM. Quotations referred to cargoes arriving in late July and early August. In late July, general pyrometallurgy port arrivals were quoted at $70-80 with no transactions heard, QP August. Overall, the willingness to transact among both buyers and sellers significantly weakened.

(4) Secondary copper: On July 23, the price of recycled copper raw materials remained flat MoM. The price of bare bright copper in Guangdong was 73,600-73,800 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,436 yuan/mt, up 150 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,120 yuan/mt. According to an SMM survey, many import traders reported that due to persistent import losses and the traditional domestic off-season in July, the port arrivals of recycled copper raw materials in July are expected to decrease by 50% MoM. Therefore, the import data for recycled copper raw materials in July may show a significant pullback compared to June.

(5) Inventory: On July 23, LME copper cathode inventories decreased by 25 mt to 124,825 mt. SHFE warrant inventories dropped by 9,972 mt to 15,535 mt on the same day.

Prices: Macro perspective, trade policy disturbances persisted. The White House denied the EU's statement about the "US setting a 15% benchmark tariff," emphasizing that all claims before Trump's official announcement were speculative. Meanwhile, the EU plans to impose 30% tariffs on 100 billion euros of US goods in retaliation. Trump announced a new trade agreement between the US and Japan, significantly improving market risk appetite and boosting LME copper prices. The market began to focus on the potential for a US-China trade deal. Trump further declared plans to impose tiered tariffs of 15%-50% on multiple countries but promised to cancel the clauses if major countries open their markets. Regarding the US Fed, White House economic advisor Kudlow clarified that Trump has no intention of firing Powell, temporarily easing policy confrontation pressure. On the supply side, smelters were shipping, replenishing domestic supply and slightly loosening availability. Demand side, high copper prices suppressed downstream purchasing sentiment. Considering macro policy uncertainties and marginally weakening fundamentals, copper prices are expected to encounter resistance today.

[Data source statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, for reference only and not constituting decision-making advice.]

[The above information is based on market collection and comprehensive evaluation by the Shanghai Metals Market (SMM) research team. The information provided herein is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should exercise caution and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]