Expectations for US Fed Interest Rate Cut Strengthen, Benefiting Copper Prices [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,679.5/mt overnight, fluctuated rangebound at $9,670.5/mt in early trading, then the center of copper prices gradually moved upward to a high of $9,712/mt, and finally closed at $9,721/mt, up 0.38%, with trading volume reaching 14,000 lots and open interest reaching 263,000 lots. The most-traded SHFE copper 2509 contract opened at 78,560 yuan/mt overnight, fluctuated downward to a low of 78,480 yuan/mt in early trading, then fluctuated upward all the way to a high of 78,800 yuan/mt near the end of the session, and finally closed at 78,730 yuan/mt, up 0.19%, with trading volume reaching 16,000 lots and open interest reaching 132,000 lots.

[SMM Copper Morning Meeting Minutes] News: (1) The meeting minutes showed that at the latest US Fed monetary policy meeting at the end of last month, policymakers did not have a consensus on inflation, employment, or the impact of the Trump administration's tariff policies. The mainstream view was that, compared to employment, the risks of inflation were more concerning. From this perspective, the minutes were hawkish.

(2) Foreign Ministry Spokesperson Mao Ning presided over the regular press conference on August 20. A foreign media reporter asked: US Treasury Secretary Besant said in a media interview that the US is satisfied with the current level of tariffs on China. This is seen as a signal that the Trump administration wants to remain calm with China before the November tariff deadline expires.

Spot: (1) Shanghai: On August 20, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 130-250 yuan/mt, with an average premium of 190 yuan/mt, down 5 yuan/mt from the previous day. Looking ahead to today, domestic supply is expected to continue to be supplemented, and the price spread between futures contracts has shown signs of slight expansion recently. Spot premiums for SHFE copper are expected to remain under pressure.

(2) Guangdong: On August 20, Guangdong #1 copper cathode spot prices against the front-month contract were at a premium of 30-90 yuan/mt, with an average premium of 60 yuan/mt, up 10 yuan/mt from the previous day. Overall, inventory pulled back, suppliers refused to budge on prices while selling, but downstream purchasing sentiment remained low due to anticipation of warrant outflows. Current warrant volume in Guangdong is as high as 15,600 mt.

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

(4) Secondary copper: On August 20, prices for recycled copper raw materials fell 300 yuan/mt MoM. Guangdong bare bright copper prices were 73,000-73,200 yuan/mt, down 300 yuan/mt from the previous day. The price difference between copper cathode and copper scrap was 944 yuan/mt, down 106 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 650 yuan/mt. According to an SMM survey, China's imports of recycled copper raw materials in July reached 190,000 mt in physical content, up 3.73% MoM but down 1.98% YoY. Imports from Japan and Thailand exceeded expectations both MoM and YoY. Amid tariff impacts and expectations of a domestic off-season, Japan and Thailand provided strong support to China's supply of recycled copper raw materials.

(5) Inventory: On August 19, LME copper cathode inventory increased by 1,200 mt to 156,350 mt; on August 20, SHFE warrant inventory decreased by 275 mt to 25,223 mt.

Price: Macro front, policy divergence within the US Fed emerged. Although the July meeting kept interest rates unchanged, a minority of officials supported an interest rate cut in September. Meanwhile, geopolitical risks persisted, with Israel not responding to the ceasefire proposal and continuing military operations, and Russia strongly opposing NATO troops in Ukraine. The market awaited news from Ukraine talks. A rebound in crude oil and strengthened expectations for US Fed interest rate cuts provided positive support for copper prices. Fundamentals: Supply side, increased arrivals at domestic smelters have shifted the spot supply landscape for copper cathode from previously tight to clearly loose. Demand side, the traditional off-season persists, with downstream players maintaining purchasing as needed and restocking moderately at lows, overall sentiment remains cautious. In summary, positive macro developments provide some support for copper prices at lower levels.

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[The above information is based on market collection and comprehensive assessment 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 decisions cautiously and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]