September interest rate cut expectations continue to strengthen, US dollar index retreats and copper prices slightly warm up [SMM Copper Morning Meeting Summary]

Futures: Last Friday night, LME copper opened at $9,739/mt, dipped to a low of $9,708/mt in early trading, then fluctuated upward throughout the session, reaching a high of $9,813.5/mt near the close. After a slight pullback at the close, it rebounded to a high and finally settled at $9,809/mt, up 0.77%. Trading volume reached 17,000 lots, while open interest rose to 268,000 lots. On the same night, the most-traded SHFE copper 2509 contract opened and dipped to a low of 78,710 yuan/mt, surged to a high of 79,320 yuan/mt during the session, and finally settled at 79,110 yuan/mt after a pullback at the close, up 0.51%. Trading volume reached 21,000 lots, and open interest stood at 118,000 lots.
[SMM Copper Morning Meeting Summary] News: (1) The International Copper Study Group (ICSG) stated in its latest monthly report that the global copper market experienced a supply surplus of 251,000 mt from January to June 2025, compared to a surplus of 395,000 mt in the same period last year. Global refined copper production reached 14.212 million mt from January to June 2025, up from 13.716 million mt in the same period last year. Global refined copper consumption amounted to 13.96 million mt from January to June 2025, compared to 13.321 million mt in the same period last year.
Spot: (1) Shanghai: On August 22, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 80-220 yuan/mt, with an average premium of 150 yuan/mt, down 10 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged from 78,730 to 78,930 yuan/mt. In early trading, the SHFE copper 2509 contract gradually pulled back from 78,780 yuan/mt, briefly dipping to 78,650 yuan/mt before rising to the 78,700 yuan/mt level, and finally settled at 78,700 yuan/mt in the morning session. The price spread between futures contracts (BACK) continued to fluctuate slightly, trading between BACK10-BACK30 yuan/mt in the morning session. The import profit margin for front-month SHFE copper continued to widen by nearly 300 yuan/mt. Imports are expected to continue arriving, but domestic supply has decreased accordingly. Given the current narrow fluctuations in copper prices, downstream demand is expected to remain focused on just-in-time procurement, and SHFE copper spot transactions are anticipated to remain at small premiums.
(2) Guangdong: On August 22, Guangdong #1 copper cathode spot prices against the front-month contract ranged from a premium of 30 yuan/mt to a premium of 90 yuan/mt, with an average premium of 60 yuan/mt, unchanged from the previous trading day. SX-EW copper was quoted at a discount of 40 yuan/mt to a discount of 20 yuan/mt, with an average discount of 30 yuan/mt, unchanged from the previous trading day. The average price of Guangdong #1 copper cathode was 78,735 yuan/mt, up 40 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,645 yuan/mt, also up 40 yuan/mt from the previous trading day. Overall, demand increased over the weekend, but so did shipments. Spot premiums remained unchanged from yesterday, with overall trading activity better than yesterday.
(3) Imported copper: On August 22, warrant prices ranged from $45/mt to $57/mt, with QP in August, and the average price remained unchanged from the previous trading day. Bill of lading (B/L) prices ranged from $50/mt to $68/mt, with QP in September, and the average price remained unchanged from the previous trading day. EQ copper (CIF B/L) prices ranged from $24/mt to $34/mt, with QP in September, and the average price remained unchanged from the previous trading day. Quotations reference cargo arrivals in late August and early-to-mid September. Overall, the market remains optimistic about September premiums, with suppliers beginning to enter a wait-and-see phase.
(4) Secondary copper: On August 22, the price of recycled copper raw materials remained flat 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 1,084 yuan/mt, up 50 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 680 yuan/mt. According to an SMM survey, imports of recycled copper raw materials in July grew more than expected. Some traders noted that although the domestic secondary copper rod industry is struggling, smelters are increasingly demanding recycled copper raw materials as copper ore supply remains unresolved. As a result, imports of recycled copper raw materials rose instead of falling in July.
(5) Inventory: On August 21, LME copper cathode inventories fell 375 mt to 155,975 mt. On August 22, SHFE warrant inventories dropped 1,009 mt to 24,148 mt.
Prices: On the macro front, Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium last Friday reinforced market expectations for a September interest rate cut. However, his remarks were very cautious, acknowledging increasing risks to the labor market while warning that inflationary pressures persist, without committing to a rate cut. After the speech, the US dollar index posted its largest single-day decline since early August, supporting copper prices. On the fundamentals, supply side, imported copper arrivals are expected to increase WoW, while domestic copper arrivals are flat WoW, with overall supply steady to higher. Demand side, consumption is affected by the off-season, and with copper prices fluctuating rangebound at high levels, downstream users continue to make just-in-time procurement, with little willingness to actively restock. Under the supply-demand pattern, copper inventories are expected to rise this week. Price-wise, expectations for a US Fed interest rate cut in September are still being contested, and copper prices are expected to fluctuate rangebound.
[The information provided 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.]