Preliminary agreement reached on US-EU tariff deal, multilateral negotiations kicked off this week [SMM Copper Morning Meeting Summary]

Futures market: On Friday night, LME copper opened at $9,818.5/mt, initially fluctuating at highs and touching $9,852.5/mt during the session, then fluctuating downward throughout, nearing the session end to touch a low of $9,766.5/mt before a slight rebound at the close to settle at $9,796/mt, down 0.59%, with trading volume at 12,000 lots and open interest at 270,000 lots. On Friday night, the most-traded SHFE copper 2509 contract opened at 79,180 yuan/mt, initially fluctuating at highs and touching 79,300 yuan/mt, then fluctuating downward throughout, nearing the session end to touch a low of 78,730 yuan/mt before a slight rebound at the close to settle at 78,800 yuan/mt, down 0.67%, with trading volume at 36,000 lots and open interest at 178,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) On July 24 (Thursday), during the ongoing development of Zambia's flagship Mumbezhi copper project, copper and lithium developer Prospect Resources signed an investment agreement with copper miner First Quantum Minerals (FQM). FQM's investment gives it a 15% stake in Prospect, providing significant advantages to both parties, with FQM serving as the technical partner for Prospect's future exploration and evaluation workstreams at the 85%-owned Mumbezhi project in north-west Zambia.

Spot: (1) Shanghai: On July 25, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 70-180 yuan/mt, averaging 125 yuan/mt, down 20 yuan/mt from the previous trading day; SMM #1 copper cathode prices ranged from 79,320 to 79,580 yuan/mt. In early trading, the SHFE copper 2508 contract rose from 79,230 yuan/mt to 79,330 yuan/mt before briefly surging above 79,400 yuan/mt, then fell again nearing 11:00 am. The Contango price spread between futures contracts fluctuated between C80 and C50 yuan/mt. Month-end capital repatriation needs pressured premiums, while copper prices remaining firmly above 79,000 yuan/mt dampened downstream purchase willingness. Spot premiums are expected to have further downside room next week, but continued destocking lowering inventory may limit the extent of premium declines.

Guangdong: On July 25, Guangdong #1 copper cathode spot prices against the front-month contract were at discounts of 50 yuan/mt to premiums of 30 yuan/mt, averaging a discount of 10 yuan/mt, flat from the previous trading day; SX-EW copper was at discounts of 110-90 yuan/mt, averaging a discount of 100 yuan/mt, flat from the previous trading day. The average price of Guangdong #1 copper cathode was 79,625 yuan/mt, down 35 yuan/mt from the previous trading day, while SX-EW copper averaged 79,535 yuan/mt, down 35 yuan/mt. Overall, despite continuous inventory declines, premiums remained weak, mainly due to poor downstream demand.

(3) Imported copper: On July 25, warrant prices were $45-55/mt, QP August, averaging $1/mt higher than the previous trading day; B/L prices were $58-76/mt, QP August, averaging $1/mt higher than the previous trading day, while EQ copper (CIF B/L) was $22-36/mt, QP July, averaging flat from the previous trading day, with offers referencing late July and early August arrival cargoes. Overall, the spot market remained sluggish this week, with limited downstream consumption and traders maintaining a wait-and-see stance.

(4) Secondary copper: On July 25, the price of recycled copper raw materials fell by 100 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,600-73,800 yuan/mt, down 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap stood at 841 yuan/mt, down 463 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 690 yuan/mt. According to the SMM survey, as the weekend approached, the rally in copper prices ended, followed by consecutive declines, severely dampening suppliers' sentiment for selling recycled copper raw materials. The domestic prices of recycled copper raw materials and spot copper continued to rise but not fall, making it difficult for secondary copper rod enterprises to sustain acceptance of excessively high prices for recycled copper raw materials.

(5) Inventory: On July 25, LME copper cathode inventories increased by 3,700 mt to 128,475 mt. SHFE warrant inventories decreased by 50 mt to 16,133 mt on the same day.

Prices: Macro-wise, the US dollar index rebounded for the second consecutive day, supported by strong economic data, weighing on copper prices. On tariffs, Trump stated that the US had reached a tariff agreement with the EU at a 15% rate and was considering agreements with three to four other countries, with optimistic trade sentiment expected to limit copper price declines. Supply side, arrivals of domestic cargoes in Shanghai weighed on mainstream parity prices intraday, though overall supply remained tight. Demand side, downstream consumption willingness was low recently. Despite just-in-time procurement last Friday, high copper prices suppressed downstream purchasing enthusiasm. Price-wise, as the US tariff hike deadline approaches this week, the potential 50% tariff could still pressure copper prices. For now, trade sentiment has eased somewhat, limiting downside room for copper prices today.

Data source disclaimer: Except for publicly available information, other data are derived from public information, market exchanges, and SMM's internal database model, processed by SMM for reference only and not constituting decision-making advice.

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