Expectations for US Fed interest rate cut push up copper prices; Codelco restarts El Teniente copper mine [SMM Copper Morning Meeting Summary]

Futures: On Friday night, LME copper opened at $9,700.5/mt, initially touched a low of $9,691.5/mt, then fluctuated upward and approached a high of $9,780/mt near the close, before fluctuating rangebound and finally settling at $9,768/mt, up 1.01%, with trading volume at 13,000 lots and open interest at 267,000 lots. On Friday night, the most-traded SHFE copper 2509 contract opened at 78,420 yuan/mt, initially moved sideways and touched a low of 78,320 yuan/mt, then surged straight up near the close to a high of 79,090 yuan/mt, before finally settling at 78,940 yuan/mt, up 0.64%, with trading volume at 30,000 lots and open interest at 158,000 lots.
[SMM Copper Morning Briefing] News: (1) On August 10, Codelco announced the resumption of underground operations at El Teniente, which had been forced to shut down due to a severe fatal mining accident over a week ago.
Spot: (1) Shanghai: On August 8, SMM #1 copper cathode spot prices against the front-month 2508 contract were at premiums of 70-170 yuan/mt, with the average premium at 120 yuan/mt, up 10 yuan/mt from the previous trading day; SMM #1 copper cathode prices ranged between 78,450-78,610 yuan/mt. SHFE copper futures fluctuated rangebound between 78,340-78,440 yuan/mt in early trading, with the inter-month spread remaining near 0. Overall supply will be supplemented by imports, which will continue to pressure premiums. However, as the delivery date approaches, domestic deliverable cargoes have no incentive to sell at low prices under the contango structure, likely creating a price spread against imported cargoes.
Guangdong: On August 8, Guangdong #1 copper cathode spot prices against the front-month contract ranged from a discount of 80 yuan/mt to a premium of 0 yuan/mt, with the average discount at 40 yuan/mt, up 5 yuan/mt from the previous trading day; SX-EW copper was quoted at discounts of 150-130 yuan/mt, with the average discount at 140 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 78,370 yuan/mt, up 5 yuan/mt from the previous trading day, while SX-EW copper averaged 78,270 yuan/mt, up 10 yuan/mt. Overall, downstream demand recovered, pushing spot premiums higher, with improved trading activity.
(3) Imported copper: On August 8, warrant prices were $40-52/mt, QP August, with the average price flat from the previous trading day; B/L prices were $50-64/mt, QP September, with the average price flat from the previous trading day; EQ copper (CIF B/L) was $18-30/mt, QP September, with the average price flat from the previous trading day, referencing cargoes arriving in mid-to-late August. Suppliers' urgency to offload cargoes remained evident, with a large number of offers concentrated on mid-to-late August pyrometallurgy-registered B/Ls and EQ B/Ls in early trading, but high offers weakened buyers' purchase willingness.
(4) Secondary copper: On August 8, recycled copper raw materials prices remained flat MoM. Bare bright copper prices in Guangdong stood at 73,000-73,200 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap widened by 50 yuan/mt MoM to 784 yuan/mt, while the price difference between copper cathode rod and secondary copper rod was 600 yuan/mt. According to the SMM survey, import traders of recycled copper raw materials indicated that overseas discount coefficients remained unchanged and would maintain this level throughout the year. As of June, recycled copper raw materials imports totaled 1.14 million mt, down 10,000 mt YoY. Due to overseas price inversion, import traders cannot further raise quotation coefficients, and imports of recycled copper raw materials in 2025 are unlikely to increase.
(5) Inventory: On August 8, LME copper cathode inventories decreased by 150 mt to 155,850 mt; SHFE warrant inventories rose by 1,127 mt to 21,272 mt.
Prices: Macro side, US hard data showed signs of softening. US Fed Governor Bowman expressed support for starting interest rate cuts in September with three cuts expected this year. JPMorgan also revised its expectations from one to three cuts, benefiting copper prices. Additionally, Trump announced on Friday that he would meet Putin in Alaska on August 15, potentially involving territorial exchanges, heightening Ukraine's concerns about forced land concessions. Supply side, domestic supply remained limited while imports provided some relief, easing supply pressure. Demand side, downstream stockpiling needs last Friday boosted market procurement sentiment. Price-wise, current fundamentals remained calm, with US economic data strengthening expectations for US Fed interest rate cuts in September. Copper prices are expected to hold up well today. This week, market focus will be on the "Trump-Putin meeting" developments, as any escalation in the Russia-Ukraine issue could pressure copper prices.

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

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

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