Domestic Copper Consumption Remains Mediocre, Limited Upward Momentum for Copper Prices [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,677.5/mt overnight, initially touched a low of $9,673/mt, then the price center gradually moved upward and approached $9,746.5/mt near the end of the session, finally closing at $9,734.5/mt, up 0.14%, with trading volume reaching 10,000 lots and open interest at 264,000 lots. The most-traded SHFE copper 2509 contract opened at 70,680 yuan/mt overnight, initially fell to 98,600 yuan/mt, then fluctuated upward and touched a high of 98,890 yuan/mt near the end of the session, up 0.2%, with trading volume reaching 12,000 lots and open interest at 125,000 lots.

[SMM Copper Morning Meeting Minutes] News: (1) Driven by stronger demand, the US manufacturing PMI expanded at the fastest pace in over three years. The preliminary US Markit Manufacturing PMI for August was 53.3, the highest level since May 2022, compared with an expectation of 49.7 and a previous value of 49.8. The rebound in manufacturing also pushed the composite PMI, which includes services, to its highest level so far this year in August. It also intensified persistent inflationary pressures—companies enhanced their pricing power and increasingly passed on cost increases from tariffs to customers.

(2) The funding scale of the new-type policy-based financial instrument is 500 billion yuan, focusing on emerging industries, infrastructure, and other fields, specifically including the digital economy, artificial intelligence, the low-altitude economy, the consumer sector, green and low-carbon initiatives, agriculture and rural areas, transportation and logistics, and urban infrastructure. Policy banks such as China Development Bank, Agricultural Development Bank of China, and The Export-Import Bank of China are involved.

Spot: (1) Shanghai: On August 21, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 100-220 yuan/mt, with an average premium of 160 yuan/mt, down 30 yuan/mt MoM. Looking ahead today, domestic products continue to be warehoused, and with the drag from low-priced imported sources, Shanghai spot copper premiums may fall further. Downstream procurement sentiment is expected to remain firm, limiting the decline in Shanghai spot copper premiums.

(2) Guangdong: On August 21, 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, flat MoM. Overall, end-users showed low enthusiasm for restocking, spot premiums only held flat from the previous day, and overall trading was moderate.

(3) Imported copper: On August 21, 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 cargoes arriving in late August and mid-to-early September. Overall, the morning session saw active inquiries and offers but fewer transactions.

(4) Secondary Copper: On August 21, the price of recycled copper raw materials remained unchanged MoM. The price of bare bright copper in Guangdong was 73,000-73,200 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,034 yuan/mt, up 90 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 640 yuan/mt. According to the SMM survey, as the notice on regulating investment promotion spreads more widely, many secondary copper rod enterprises have decided to start production cuts or even halt production, while some secondary copper rod enterprises have also decided to produce until next week and then suspend operations to wait and see.

(5) Inventory: On August 20, LME copper cathode inventories increased by 0 mt to 156,350 mt; on August 21, SHFE warrant inventories decreased by 66 mt to 25,157 mt.

Prices: On the macro front, US economic data showed mixed performance, with the August composite PMI hitting an eight-month high, but initial jobless claims rose significantly. Within the US Fed, there are still differences of opinion on interest rate cuts, with most officials taking a cautious stance, while Bullard advocates for significant easing. Domestically, China plans to launch a 500 billion yuan quasi-fiscal tool, focusing on supporting artificial intelligence, new energy, and infrastructure sectors. The latest policy directly benefits the AI and new energy industries, which is bullish for copper prices. On the fundamental side, imported copper continues to arrive, but domestic copper shipments are relatively low. Overall supply remains stable, while consumption remains mediocre. In terms of inventory, as of August 21, SMM's national mainstream copper inventories decreased by 2,000 mt from Monday to 131,700 mt. Overall, considering both macro and fundamental factors, copper prices are expected to have limited upside today.

[Data Source Statement: Except for public information, other data are processed by SMM based on public information, market exchanges, and SMM's 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 decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]