LME copper fell sharply overnight, with overall market sentiment remaining weak [SMM Copper Morning Meeting Summary]

Futures market: LME copper opened at $9,626/mt overnight, initially climbed to a high of $9,665/mt, then fluctuated downward to hit a low of $9,580.5/mt during the session, and maintained rangebound fluctuations before finally closing at $9,607/mt, down 1.26%, with trading volume reaching 47,000 lots and open interest at 271,000 lots. The most-traded SHFE copper 2509 contract opened at 78,180 yuan/mt overnight, initially climbed to a high of 78,270 yuan/mt, then maintained rangebound fluctuations before hitting a low of 77,960 yuan/mt toward the close, and finally settled at 78,010 yuan/mt, down 0.55%, with trading volume at 24,000 lots and open interest at 173,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) Trump announced a 50% tariff on imported semi-finished copper products effective August 1, while excluding copper cathode and other copper raw materials, which weighed on COMEX copper performance. After plunging at the close on July 30, COMEX copper continued to drop sharply on July 31. As of around 17:35 on July 31, COMEX copper was quoted at $4.3890/lb, down 21.43%.

Spot: (1) Shanghai: On July 31, SMM #1 copper cathode spot prices against the front-month 2508 contract were at a premium of 140-220 yuan/mt, with the average premium at 180 yuan/mt, up 15 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged between 78,460-78,670 yuan/mt. In early trading, the SHFE copper 2508 contract pulled back continuously from 78,700 yuan/mt, and after 11:00 AM, the futures market quickly fell to around 78,300 yuan/mt. The price spread between futures contracts fluctuated between a contango of 10 yuan/mt and a backwardation of 20 yuan/mt. As the first trading day of August begins, suppliers are expected to continue refusing to budge on prices, but with downstream stockpiling likely on Friday, actual transactions may improve compared to today.

Guangdong: On July 31, Guangdong #1 copper cathode spot prices against the front-month contract ranged from a discount of 60 yuan/mt to a premium of 20 yuan/mt, with the average discount at 20 yuan/mt, down 20 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 150-130 yuan/mt, with the average discount at 140 yuan/mt, down 40 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 78,460 yuan/mt, down 630 yuan/mt from the previous trading day, while SX-EW copper averaged 78,340 yuan/mt, down 650 yuan/mt.

(3) Imported copper: On July 31, warrant prices were $44-54/mt, QP August, with the average price flat from the previous trading day. B/L prices were $54-66/mt, QP August, with the average price flat from the previous trading day. EQ copper (CIF B/L) was quoted at $20-30/mt, QP August, with the average price flat from the previous trading day. Offers referred to cargoes arriving in early to mid-August. The market recovered during the day, with purchase willingness increasing slightly after premiums declined, but B/L offers remained scarce, with buyers being downstream processing enterprises.

(4) Secondary copper: On July 31, the price of recycled copper raw materials fell 400 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,000-73,200 yuan/mt, down 400 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap stood at 844 yuan/mt, narrowing 140 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 600 yuan/mt. According to the SMM survey, Trump's copper tariff policy officially took effect, triggering a sharp pullback in COMEX copper prices. SHFE copper also retreated under the impact. During the day, secondary copper raw material traders could hardly procure much material from upstream suppliers, while secondary copper rod enterprises opted for a wait-and-see approach due to concerns over further copper price declines.

(5) Inventory: On July 31, LME copper cathode inventories rose 1,350 mt to 138,200 mt. SHFE warrant inventories dropped 351 mt to 19,622 mt on the same day.

Price: Macro side, tariffs generally pushed up prices. Data showed the US inflation rate rebounded in June. As the market expected Trump to outline new tariffs today, inflationary pressures persisted. Meanwhile, uncertainties surrounding countries without trade agreements with the US heightened risk-off sentiment, weighing on copper prices. Fundamentals side, suppliers showed low willingness to sell on the last trading day of the month, while end-use consumption remained weak. Inventory side, as of Thursday July 31, SMM survey showed copper inventories across mainstream Chinese regions decreased 1,000 mt from Monday to 119,300 mt. Weekly inventories stopped declining and rebounded, with total inventories 229,100 mt lower YoY than the 348,400 mt recorded in the same period last year. In summary, macro uncertainties fueled risk-off sentiment, while domestic downstream consumption remained sluggish. Copper prices are expected to encounter resistance today.

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