Macro policy uncertainty suppresses upside room for copper prices [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,711.5/mt overnight, fluctuated considerably in early trading to hit a high of $9,721.5/mt, then gradually moved downward to touch a low of $9,667.5/mt before closing at $9,670.5/mt, down 0.04%. Trading volume reached 10,000 lots, and open interest stood at 263,000 lots. The most-traded SHFE copper 2509 contract opened at 78,360 yuan/mt overnight, fluctuated upward in early trading to hit a high of 78,610 yuan/mt, then gradually moved downward to touch a low of 78,320 yuan/mt near the close before settling at 78,360 yuan/mt, down 0.03%. Trading volume reached 15,000 lots, and open interest stood at 155,000 lots.

[SMM Copper Morning Briefing] News: (1) According to CCTV News, US President Donald Trump announced on Thursday (local time, 7th) that he had selected Stephen Miran, current chairman of the White House Council of Economic Advisers, to fill the vacant seat on the US Fed Board of Governors, with the term lasting until January 31, 2026.

(2) On August 7 local time, Russian Presidential Aide Ushakov stated that Russia and the US are jointly preparing for specific arrangements of the bilateral leaders' meeting. Ushakov noted that the specific venue for the meeting between Putin and Trump would be announced later. He said the target was to hold the meeting next week, but the exact preparation time remained uncertain. Additionally, Witkov mentioned a potential trilateral meeting involving leaders from the US, Russia, and Ukraine, to which Russia declined to comment.

Spot: (1) Shanghai: On August 7, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 70-150 yuan/mt, with the average premium at 110 yuan/mt, up 10 yuan/mt MoM. Weekly inventory saw a slight decline, mainly due to low-priced imported cargo being absorbed while domestic supply remained limited. Spot premiums are expected to remain firm today.

(2) Guangdong: On August 7, Guangdong #1 copper cathode spot prices against the front-month contract ranged from discounts of 90 yuan/mt to premiums of 0 yuan/mt, with the average discount at 45 yuan/mt, up 10 yuan/mt MoM. Overall, suppliers opted to transfer larger-discounted cargo to delivery warehouses, driving premiums higher, though actual transactions were moderate.

(3) Imported copper: On August 7, warrant prices were at $40-52/mt, QP August, with the average price flat MoM; B/L prices were at $50-64/mt, QP September, with the average price up $1/mt MoM; EQ copper (CIF B/L) was at $16-28/mt, QP September, with the average price flat MoM. Quotations referenced cargo arriving in mid-to-late August. Overall, activity among buyers and sellers increased as premiums bottomed out and recovered.

(4) Secondary copper: At 11:30 on August 7, the futures closing price was 78,390 yuan/mt, up 170 yuan/mt from the previous trading day. The average spot premium/discount was 110 yuan/mt, up 10 yuan/mt from the previous trading day. Today, recycled copper raw material prices rose 100 yuan/mt MoM. Guangdong bare bright copper prices were at 73,000-73,200 yuan/mt, up 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 734 yuan/mt, up 74 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod stood at 590 yuan/mt. According to the SMM survey, as copper prices continued to fluctuate, the price amplitude in the recycled copper raw materials market this week was only 100 yuan/mt. Moreover, purchases became more difficult when copper prices declined. Unless copper prices experience a significant retreat, it would be unlikely to trigger panic selling sentiment among recycled copper raw materials traders.

(5) Inventory: On August 6, LME copper cathode inventories decreased by 125 mt to 156,000 mt. On August 7, SHFE warrant inventories dropped by 201 mt to 20,145 mt.

Prices: Macro-wise, the US reciprocal tariffs officially took effect, which are expected to increase US fiscal revenue. Meanwhile, personnel changes at the US Fed drew attention, with Trump nominating Stephen Milan as a Fed governor and Waller emerging as a hot candidate for the new chair. US Treasury Secretary Besant stated that the interview process for the chair had commenced. Policy uncertainties intensified market volatility, capping the upside room for copper prices. Supply side, high-end supplies remained tight, with limited replenishment from low-priced imports and uneven regional circulation. Demand side, downstream purchases remained cautious due to high copper prices. Inventory-wise, as of Thursday, August 7, SMM's mainstream copper inventories across China decreased by 3,900 mt from Monday to 132,000 mt. Overall, copper prices were expected to encounter resistance today.

[Data source statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, 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 information provided herein is for reference only. This article does not constitute direct investment research or decision-making 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.]