LME copper closed slightly lower overnight, with conservative sentiment prevailing in the LME market [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened at $9,830.5/mt, initially touched a high of $9,856.5/mt, then fluctuated downward, nearing the session end to hit a low of $9,759/mt before a slight rebound to close at $9,796/mt, down 0.34%. Trading volume reached 12,000 lots, and open interest stood at 270,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 79,130 yuan/mt, initially touched a high of 79,240 yuan/mt, fluctuated downward during the session to hit a low of 78,810 yuan/mt, then rebounded sharply to higher levels before consolidating sideways, finally closing at 79,010 yuan/mt, up 0.04%. Trading volume reached 33,000 lots, and open interest stood at 175,000 lots.

[SMM Copper Morning Briefing] News: (1) Western Mining Co., Ltd.'s semi-annual report showed H1 revenue reached 31.619 billion yuan, up 26.59% YoY, with total profit of 3.88 billion yuan (up 22.84% YoY) and net profit of 3.363 billion yuan, including 1.869 billion yuan attributable to parent company shareholders (up 15.35% YoY). The growth was mainly driven by an 8% YoY increase in copper cathode production and an 11% YoY rise in prices.

Spot: (1) Shanghai: On July 28, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 50-140 yuan/mt, averaging 95 yuan/mt (down 30 yuan/mt from the previous day). SMM #1 copper cathode prices ranged 78,950-79,200 yuan/mt. The SHFE copper 2508 contract initially surged from around 78,880 yuan/mt, briefly touching 79,080 yuan/mt before declining, with noticeable open interest reduction in the front-month contract nearing month-end. As futures fell, the contango structure narrowed to C40-C20 yuan/mt in the morning session. Shanghai spot copper premiums may decline further, but suppliers' willingness to sell at discounts under contango may limit the downside room for spot premiums.

Guangdong: On July 28, Guangdong #1 copper cathode spot prices against the front-month contract ranged from discounts of 40 yuan/mt to premiums of 20 yuan/mt, averaging a 10 yuan/mt discount (down 5 yuan/mt from the previous day). SX-EW copper traded at discounts of 100-80 yuan/mt, averaging 90 yuan/mt (down 10 yuan/mt). The average price for Guangdong #1 copper cathode was 78,930 yuan/mt (down 400 yuan/mt), while SX-EW copper averaged 78,850 yuan/mt (down 405 yuan/mt). Overall, weakening consumption and two consecutive inventory increases led to lower spot premiums and poor trading activity.

(3) Imported copper: On July 28, warrant prices were $45-55/mt (QP August), unchanged on average from the previous day; B/L prices were $58-72/mt (QP August), averaging $2/mt lower, while EQ copper (CIF B/L) was quoted at $22-32/mt (QP July), averaging $2/mt lower. Offers referenced cargoes arriving in early-mid August. The SHFE/LME price ratio remained in the import loss range during the day, with market offers mainly consisting of warrants, along with sporadic small volumes of registered B/L and EQ B/L offers, but transactions remained weak.

(4) Secondary copper: On July 28, the price of recycled copper raw materials dropped 100 yuan/mt MoM, with bare bright copper in Guangdong priced at 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.

(5) Inventory: On July 28, LME copper cathode inventories decreased by 1,075 mt to 127,400 mt, while SHFE warrant inventories rose by 1,699 mt to 17,832 mt.

Prices: Macro-wise, the US-EU trade agreement boosted the US dollar and risk sentiment. Meanwhile, Trump continued pressuring Fed Chairman Powell to lower borrowing costs, though the market widely expects the US Fed to keep rates unchanged, weighing on copper prices. LME copper edged down slightly. On the supply side, domestic and imported arrivals were reported over the weekend, with additional domestic supply expected this week. Coupled with month-end supplier liquidation needs, overall supply remained ample. Demand side, downstream purchasing sentiment improved slightly as copper prices dipped during the day. Inventory-wise, as of July 28, SMM's mainstream copper inventories across China rose 6,100 mt WoW to 120,300 mt, with total inventories down 230,900 mt YoY from 351,200 mt, remaining at relatively low levels. Price-wise, the market awaits news on US trade agreements with multiple countries, expecting copper prices to fluctuate rangebound until then.

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 provided information is for reference only. This article does not constitute direct investment research or decision-making advice. Clients should exercise caution and not use it as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]