US Fed keeps benchmark interest rate unchanged; US 50% tariffs exclude refined copper [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened and touched a high of $9,751/mt, then fluctuated downward throughout the session, nearing a low of $9,676/mt before finally settling at $9,730/mt, down 0.74%. Trading volume reached 16,000 lots, while open interest stood at 271,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 78,640 yuan/mt, initially touching a high of 78,770 yuan/mt before fluctuating downward to a low of 78,550 yuan/mt near the close, ultimately settling at 78,700 yuan/mt, down 0.47%. Trading volume reached 28,000 lots, with open interest at 170,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) On July 30 local time, the US White House announced that President Trump imposed a 50% universal tariff on imported semi-finished copper products and copper-intensive derivative products, effective August 1. The White House stated that copper raw materials and copper scrap are not subject to "Section 232" or reciprocal tariffs.

(2) On July 30 local time, the US Fed decided to maintain the federal funds rate target range at 4.25%-4.50%, in line with market expectations, marking the fifth consecutive decision to hold rates steady. The vote was 9 in favor, 2 against, with one governor absent and not voting.

Spot market: (1) Shanghai: On July 30, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 130-200 yuan/mt, averaging 165 yuan/mt, up 55 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged from 79,200-79,370 yuan/mt. Early in the session, the SHFE copper 2508 contract fluctuated between 79,040-79,130 yuan/mt before rising to 79,180 yuan/mt, then rapidly falling to 79,010 yuan/mt after 11:00 am. The contango spread between nearby contracts fluctuated between C40-C10 yuan/mt. Month-end supplier selling sentiment further weakened, with Shanghai spot copper sales sentiment dropping 0.04 to 3.18 from the previous day. Limited market supply pushed Shanghai spot copper premiums higher, with expectations of continued firmness tomorrow.

Guangdong: On July 30, 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, unchanged from the previous trading day. SX-EW copper was quoted at discounts of 110-90 yuan/mt, averaging 100 yuan/mt, down 20 yuan/mt from the previous day. The average price of Guangdong #1 copper cathode was 79,090 yuan/mt, up 180 yuan/mt from the previous day, while SX-EW copper averaged 78,990 yuan/mt, up 160 yuan/mt. Overall, weak consumption near month-end led spot premiums to jump initially and then pull back, with overall trading activity remaining poor.

(3) Imported copper: On July 30, warrant prices were $44-54/mt, QP August, averaging $1/mt lower than the previous trading day. B/L prices were $54-66/mt, QP August, averaging $1/mt lower than the previous day. EQ copper (CIF B/L) was $20-30/mt, QP August, averaging unchanged from the previous day. Offers referenced cargoes arriving in early to mid-August. The market recovered during the day, with buyers' purchase willingness increasing slightly after the premium declined. However, B/L offers remained scarce, and buyers were downstream processing enterprises.

(4) Secondary copper: On July 30, the price of recycled copper raw materials rose by 100 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,400-73,600 yuan/mt, up 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 984 yuan/mt, up 24 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 760 yuan/mt. According to the SMM survey, domestic smelters intend to raise the copper anode RC in August. Smelters' copper anode inventories are only at normal levels, and the increase in RC is simply to avoid long-term low RC levels. However, secondary copper rod enterprises reported that the State Taxation Administration has begun inspections in various provinces. These enterprises indicated that input invoices can only use "reverse invoicing" or 13% VAT invoices. Some enterprises are unable to issue relevant output invoices when selling copper anodes due to the lack of such input invoices. Therefore, the increase in RC in August is not the main reason for the decline in copper anode sales.

(5) Inventory: On July 30, LME copper cathode inventories increased by 9,225 mt to 136,850 mt. On the same day, SHFE warrant inventories rose by 1,890 mt to 19,973 mt.

Prices: On the macro front, the US Fed kept interest rates unchanged as expected on Wednesday, while strong US economic data left little indication of when it might cut interest rates. The US dollar index expanded its gains, weighing on copper prices. Meanwhile, Trump announced on Wednesday that a 50% tariff would be imposed on all semi-finished copper products entering the US starting August 1, but the tariff would not apply to imported copper cathode. US copper prices plunged 18%. On the fundamental side, overall supply remained tight with limited availability. Demand side, brand price spreads widened during the day, and suppliers' month-end shipment sentiment further declined, with persistently high premiums affecting market trading sentiment. Price-wise, macro uncertainties persist, coupled with weak supply and demand fundamentals. Copper prices are expected to have further downside room today.

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