Macro Policy Uncertainty Causes Copper Prices to Encounter Resistance [SMM Copper Morning Meeting Summary]

Futures: LME copper opened and hit a high of $9,747/mt overnight, then the price center gradually moved downward, approaching a low of $9,680/mt near the end of the session, and finally closed at $9,684.5/mt, down 0.69%. Trading volume reached 15,000 lots, and open interest reached 265,000 lots. Overnight, the most-traded SHFE copper 2509 contract opened at 78,690 yuan/mt, hit a high of 78,770 yuan/mt at the beginning of the session, then fluctuated downward, approaching a low of 78,510 yuan/mt near the end of the session, and finally closed at 78,550 yuan/mt.

[SMM Copper Morning Meeting Minutes] News: (1) On Tuesday (August 19), the US Department of Commerce announced that 407 product categories would be included in the steel and aluminum tariff list, with an applicable tax rate of 50%. According to the US Department of Commerce's confirmation on Tuesday, the new tariffs took effect on Monday of this week, significantly expanding the scope of tariffs previously announced by Trump for key commodities.

(2) In an interview with Fox News on the 19th, US President Trump said that the US would help Ukraine defend itself but would not send ground troops to Ukraine, "I can guarantee that." Trump also reiterated that Ukraine would not be allowed to join NATO. However, according to him, some European countries have agreed to provide Ukraine with protection measures similar to those provided by NATO, including "security guarantees." The above-mentioned White House official said that the US, its European allies, and Ukraine will continue to discuss how to provide security guarantees for Ukraine.

Spot: (1) Shanghai: On August 19, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 140-250 yuan/mt, with an average premium of 195 yuan/mt, down 30 yuan/mt from the previous trading day. Looking ahead to today, with import supplements expected, downstream buyers still have a bargaining mentality, and spot premiums are at risk of further decline.

(2) Guangdong: On August 19, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a discount of 20 yuan/mt to a premium of 80 yuan/mt, with an average premium of 50 yuan/mt, up 10 yuan/mt from the previous trading day. Overall, both copper prices and inventory declined, suppliers refused to budge on prices for shipments, but actual transactions were limited. Attention is on the outflow of warrants in the future market.

(3) Imported copper: On August 19, warrant prices were $42-54/mt, QP August, with the average price flat MoM; B/L prices were $46-60/mt, QP September, with the average price down $2/mt MoM; EQ copper (CIF B/L) was $20-30/mt, QP September, with the average price flat MoM. Quotations referred to cargo arriving in late August and mid-to-early September. Overall, inquiries and offers were active in the morning session, but transactions were limited.

(4) Secondary copper: On August 19, recycled copper raw materials prices fell 100 yuan/mt MoM. Guangdong bare bright copper prices were 73,300-73,500 yuan/mt, down 300 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,050 yuan/mt, up 36 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 770 yuan/mt. According to an SMM survey, as the notice on standardizing investment promotion began to spread regionally in some areas, more and more enterprises plan to only purchase recycled copper raw materials with invoices starting from September. The demand for imported recycled copper raw materials is expected to increase significantly. However, there are still individual issues in the implementation of the "reverse invoicing" process, which hinders the enthusiasm of enterprises. Compared to the convenience of obtaining invoices for imported recycled copper raw materials, enterprises will prioritize purchasing imported recycled copper raw materials to solve the invoice issue for recycled copper raw materials.

(5) Inventory: On August 18, LME copper cathode inventories decreased by 450 mt to 155,150 mt; on August 19, SHFE warrant inventories increased by 0 mt to 25,498 mt.

Price: From a macro perspective, the US included 407 categories of steel and aluminum derivative products in the tariff list, and Treasury Secretary Besant is about to interview candidates for Fed Chairman, which triggered market concerns and jointly pressured copper prices. On the fundamental side, although the supply of high-quality copper remains limited, imported sources continue to supplement the market, putting pressure on the sales of mainstream brands, and the overall supply side appears slightly loose. On the demand side, the consumer market overall performed weakly, and insufficient end-use demand led to low purchase willingness among downstream enterprises. Overall, the uncertainty of macro policies, combined with the fundamental pattern of loose supply and weak demand, is expected to put pressure on copper prices today.

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[The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]