Downstream consumption performed poorly, and copper prices encountered resistance [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened at $9,626/mt, initially touched a high of $9,665/mt, then fluctuated downward to a low of $9,580.5/mt during the session, and ended rangebound at $9,607/mt by the close, down 1.26%. Trading volume reached 47,000 lots, and open interest stood at 271,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 78,180 yuan/mt, initially touched a high of 78,270 yuan/mt, then fluctuated rangebound to a low of 77,960 yuan/mt by the close, and finally settled at 78,010 yuan/mt, down 0.55%. Trading volume reached 24,000 lots, and open interest stood at 173,000 lots.

[SMM Copper Morning Briefing] News: (1) The White House issued an executive order to reset "reciprocal tariff" rates for certain countries: Countries listed in Annex 1 will be subject to individual rates, while unlisted countries will uniformly face a 10% tariff. If any country or region circumvents tariffs via transshipment through a third location, their goods will be subject to a 40% transshipment tax. According to the White House announcement, the new tariffs will not take effect until August 7, providing another window for countries to negotiate tariff reductions.

(2) At a press conference, the National Development and Reform Commission (NDRC) stated that to promote high-quality development of the private economy, it has established a regular communication mechanism with private enterprises, holding 17 symposiums and engaging in face-to-face discussions with nearly 80 private firms. Regarding widespread concerns over "rat race" competition, the NDRC is coordinating measures including legal revisions, policy issuance, standard improvements, and strengthened industry self-discipline.

Spot: (1) Shanghai: On August 1, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 130-220 yuan/mt, averaging 175 yuan/mt, down 5 yuan/mt MoM. Overall, despite continuous inventory declines, premiums remained weak, primarily due to sluggish downstream demand. Next week, copper prices at 78,000-78,500 yuan/mt are unlikely to attract substantial downstream purchases, and spot premiums are expected to struggle for upward momentum. However, recent fluctuations in invoice space may affect circulating spot supply, warranting attention to suppliers' reluctance to budge on prices.

(2) Guangdong: On August 1, Guangdong #1 copper cathode spot prices against the front-month contract ranged from a discount of 60 yuan/mt to a premium of 30 yuan/mt, averaging a discount of 15 yuan/mt, up 5 yuan/mt MoM. Overall, persistently weak consumption led to spot premiums jumping initially and then pulling back, with overall trading muted.

(3) Imported copper: On August 1, warrant prices were $44-54/mt, QP August, averaging down $1/mt MoM; B/L prices were $54-66/mt, QP August, averaging down $1/mt MoM; EQ copper (CIF B/L) was $20-30/mt, QP August, averaging flat MoM. Quotes referenced cargoes arriving in early to mid-August. Overall, the market exhibited weak supply and demand with limited fluctuations.

(4) Secondary copper: At 11:30 on August 1, the futures closing price stood at 78,290 yuan/mt, down 140 yuan/mt from the previous trading day. The average spot premiums/discounts were 175 yuan/mt, down 5 yuan/mt from the prior session. Today, recycled copper raw materials prices dropped 100 yuan/mt MoM. Guangdong bare bright copper prices ranged between 72,900-73,100 yuan/mt, down 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap narrowed to 805 yuan/mt, down 39 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 650 yuan/mt. According to the SMM survey, as Trump implemented copper import tariffs, the COMEX-LME copper price spread rapidly narrowed. Although LME prices remain the mainstream benchmark overseas, the White House stated that by 2027, 25% of high-grade recycled copper raw materials must be retained for domestic consumption in the US to maintain relatively ample copper supply. If this policy materializes, it could further elevate US secondary copper prices, potentially shifting market quotations back to LME dominance.

(5) Inventories: On August 1, LME copper cathode inventories rose by 3,550 mt to 141,750 mt, while SHFE warrant inventories increased by 727 mt to 20,349 mt.

Prices: Macro-wise, the US July non-farm payrolls grew by only 73,000, and the July ISM manufacturing PMI fell to 48. The weaker-than-expected data dragged down the US dollar index, boosting LME copper. Fundamentally, tight spot order supply and invoice volatility restricted circulation, strengthening suppliers' reluctance to budge on prices and maintaining market tension. Demand side, despite copper price corrections, they remained elevated, coupled with off-season factors, resulting in sluggish demand. Overall, fundamentals showed weak supply and demand, limiting upside potential for copper prices today.

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

[The above information is based on market collection and comprehensive evaluation by the SMM research team. The provided content is for reference only. This article does not constitute direct investment research advice. Clients should exercise caution and not use it as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]