China-US tariff negotiations begin; LME copper closes slightly higher overnight [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened at $9,787.5/mt, initially touched a low of $9,758.5/mt at the opening, then fluctuated upward throughout the session, nearing a high of $9,827/mt before the close, and finally settled at $9,803/mt with a minor rebound, up 0.41%. Trading volume reached 11,000 lots, while open interest stood at 269,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 78,910 yuan/mt, initially touched a high of 78,870 yuan/mt at the opening, then fluctuated upward to reach 79,230 yuan/mt before rangebound fluctuation, and finally settled at 79,090 yuan/mt, up 0.14%. Trading volume reached 22,000 lots, while open interest stood at 172,000 lots.

[SMM Copper Morning Briefing] News: (1) First Quantum Minerals (FQM) reported progress regarding its suspended Cobre Panama (CP) mine in Panama, while its Zambian mines saw Q2 copper and nickel production decline. On the 24th, FQM stated in its Q2 report that the controversial CP mine had resumed concentrate shipments, marking its first exports since being ordered to suspend operations by the Panamanian government at the end of 2023.

Spot market: (1) Shanghai: On July 29, SMM #1 copper cathode spot prices against the front-month 2508 contract were quoted at premiums of 80-140 yuan/mt, averaging 115 yuan/mt, up 15 yuan/mt from the previous day. SMM #1 copper cathode prices ranged between 78,950-79,100 yuan/mt. The SHFE copper 2508 contract fluctuated between 78,870-79,950 yuan/mt in early trading, edged higher after 11:00 am, and settled at 78,940 yuan/mt by midday. The contango spread between nearby contracts fluctuated between C40-C10 yuan/mt. Trading sentiment is expected to remain weak, but with limited supply replenishment and persistent contango structure, suppliers are unlikely to lower prices significantly, leaving little room for spot premiums to decline.

Guangdong: On July 29, Guangdong #1 copper cathode spot prices against the front-month contract ranged from discounts of 30 yuan/mt to premiums of 30 yuan/mt, averaging parity, up 10 yuan/mt from the previous day. SX-EW copper was quoted at discounts of 90-70 yuan/mt, averaging 80 yuan/mt, up 10 yuan/mt from the previous day. The average price of Guangdong #1 copper cathode was 78,910 yuan/mt, down 20 yuan/mt from the previous day, while SX-EW copper averaged 78,830 yuan/mt, down 20 yuan/mt. Overall, with inventory declining again, suppliers refused to budge on prices, but overall trading remained subdued.

(3) Imported copper: On July 29, warrant prices were quoted at $45-55/mt, QP August, averaging flat from the previous day; B/L prices were quoted at $54-68/mt, QP August, averaging down $4/mt from the previous day; EQ copper (CIF B/L) was quoted at $20-30/mt, QP August, averaging down $2/mt from the previous day. Offers referred to cargoes arriving in early-mid August. The market was relatively more active intraday compared to yesterday, but buyers' counteroffers drove prices lower, resulting in poor transaction volumes. Suppliers remained in a wait-and-see mode.

(4) Secondary copper: On July 29, the price of recycled copper raw materials remained flat MoM. The price of bare bright copper in Guangdong was 73,300-73,500 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap stood at 960 yuan/mt, up 5 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 630 yuan/mt. According to the SMM survey, amid fluctuating copper prices, suppliers of recycled copper raw materials significantly reduced purchases. Intraday transaction prices for ordinary bare bright copper wire were 73,450 yuan/mt, while first-grade copper cable scrap (Cu＞99.5%) even reached 73,650 yuan/mt. Secondary copper rod enterprises reported renewed procurement pressure.

(5) Inventory: On July 29, LME copper cathode inventories rose by 225 mt to 127,625 mt; SHFE warrant inventories increased by 251 mt to 18,083 mt.

Prices: Macro-wise, Trump escalated pressure on Russia over the Ukraine war and expressed optimism about easing trade tensions between the US and its major trading partners, driving international oil prices sharply higher and boosting copper prices. Fundamentally, as month-end approached, the market largely halted bulk business after completing long-term contract deliveries, leading to tight supply availability. Demand side, intraday transaction sentiment remained weak, with both procurement and sales sentiment declining. Price-wise, as trade agreements between multiple countries and the US are still under negotiation, copper prices are expected to fluctuate rangebound until then.

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