Expectations for US Fed Interest Rate Cut Heat Up, Supporting Copper Prices [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,754/mt last Friday night, initially fluctuating downward to test the low of $9,725/mt before gradually rebounding to touch a high of $9,808/mt, then fluctuating downward again to finally close at $9,759/mt, down 0.17%, with trading volume at 12,000 lots and open interest at 271,000 lots. The most-traded SHFE copper 2509 contract opened at 79,060 yuan/mt last Friday night, immediately testing the low of 78,900 yuan/mt before gradually rallying to touch a high of 79,290 yuan/mt, then fluctuating downward to finally close at 79,080 yuan/mt, up 0.15%, with trading volume at 13,000 lots and open interest at 150,000 lots.

[SMM Copper Morning Briefing] News: (1) Recently, the US announced additional tariffs on Indian goods as punishment for India's purchase of Russian oil. The US also threatened to impose secondary tariffs on Chinese exports to the US due to purchases of Russian oil.

(2) PBOC: Promoting reasonable price recovery will be a key consideration in monetary policy implementation, with moderately loose monetary policies to be thoroughly implemented. Based on domestic and overseas economic and financial conditions as well as financial market performance, the intensity and pace of policy implementation will be carefully managed to maintain ample liquidity, ensuring growth in social financing and money supply aligns with economic growth and price level targets, thereby sustaining a favorable financial environment.

Spot: (1) Shanghai: On August 15, SMM #1 copper cathode spot prices against the front-month 2508 contract were at a premium of 120-240 yuan/mt, averaging 180 yuan/mt, down 30 yuan/mt MoM. Looking ahead this week, as the SHFE copper 2509 contract becomes active, the price spread between futures contracts remains relatively small. Spot premiums are expected to continue quoting around 100 yuan/mt. However, downstream imported cargoes are arriving, mostly registered warrants, likely prompting holders to offload early, putting pressure on spot premiums.

(2) Guangdong: On August 15, Guangdong #1 copper cathode spot prices against the front-month contract ranged from parity to a premium of 50 yuan/mt, averaging 25 yuan/mt, down 35 yuan/mt MoM. Overall, the expanded price spread during delivery weakened market activity, with attention on this week's arrivals.

(3) Imported copper: On August 15, warrant prices were $42-54/mt, QP August, averaging up $1/mt MoM; B/L prices were $48-62/mt, QP September, averaging up $1/mt MoM; EQ copper (CIF B/L) was $20-30/mt, QP September, averaging flat MoM, with quotes referencing mid-to-late August and early September arrivals. Overall, the market remains optimistic about the September SHFE/LME price ratio, and with no significant growth expected in September imports, Yangshan copper premiums are anticipated to rebound.

(4) Secondary copper: At 11:30 on August 15, the futures closing price stood at 79,110 yuan/mt, flat from the previous trading session. The average spot premiums/discounts were 180 yuan/mt, down 30 yuan/mt from the previous trading day. Today, the price of recycled copper raw materials remained flat MoM. The price of bare bright copper in Guangdong ranged between 73,400-73,600 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap narrowed to 1,099 yuan/mt, down 30 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 820 yuan/mt. According to the SMM survey, importers of recycled copper raw materials reported that the quoted coefficient remained unchanged this week. It is expected that the quoted range for bare bright copper will maintain at 99%-99.5% for the rest of the year, while overseas supply remains tight.

(5) Inventory: On August 14, LME copper cathode inventories decreased by 50 mt to 155,800 mt. On August 15, SHFE warrant inventories increased by 126 mt to 24,560 mt.

Prices: Macro side, the meeting between Trump and Putin to promote the Russia-Ukraine ceasefire process reduced geopolitical risks, coupled with expectations for US Fed interest rate cuts in September supporting copper prices. However, Trump's proposed 300% tariff on chips and expanded steel and aluminum tariffs triggered trade policy uncertainties, capping gains. Supply side, domestic standard copper and imported copper supply remained ample, while high-quality copper resources such as Jinchuan were tight. Demand side, persistently high copper prices suppressed downstream purchasing sentiment, with weak demand performance. Overall, copper prices are expected to fluctuate rangebound today.

[Data source statement: Except for public 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 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.]