LME Copper Was on Holiday, SHFE Copper Rose Sharply Towards 80000 Yuan/mt [SMM Copper Morning Session Summary]

Futures: LME copper was closed overnight. The most-traded SHFE copper contract 2510 opened and touched a low of 79,600 yuan/mt overnight, hit a high of 79,810 yuan/mt at the beginning of the session, then fluctuated rangebound and finally closed at 79,640 yuan/mt, up 0.44%. Trading volume was 20,000 lots, and open interest was 173,000 lots.
[SMM Copper Morning Meeting Minutes] News: (1) Codelco said on Sunday that Chile's mining regulator Sernageomin has approved the resumption of production at the Andes Norte and Diamante sections of the El Teniente copper mine after an accident on July 31 suspended operations.
Spot: (1) Shanghai: On August 25, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 80-220 yuan/mt, with the average premium at 140 yuan/mt, down 10 yuan/mt from the previous trading day. SMM #1 copper cathode prices were 79,270-79,520 yuan/mt. Fed Chairman Powell's speech at the Jackson Hole central bank symposium strengthened market expectations for a September interest rate cut. The US dollar fell below the 98 level, and copper prices rose accordingly. The SHFE copper 2509 contract showed strength in the morning session, hovering around 79,220 yuan/mt, and surged to 79,480 yuan/mt around 11:00 before closing the morning session at 79,390 yuan/mt. The price spread between front-month and next-month contracts was almost flat, while the far-month contracts still showed a backwardation structure. After the market shifted to trading cargoes with invoices dated next month, activity is expected to decline. Maintenance at northern smelters has reduced shipments to Shanghai, and with limited domestic supply, spot premiums for SHFE copper are expected to remain firm.
(2) Guangdong: On August 25, spot prices of #1 copper cathode in Guangdong against the front-month contract were at a premium of 30-90 yuan/mt, with the average premium at 60 yuan/mt, flat from the previous trading day. SX-EW copper was reported at a discount of 40-20 yuan/mt, with the average discount at 30 yuan/mt, flat from the previous trading day. The average price of #1 copper cathode in Guangdong was 79,255 yuan/mt, up 520 yuan/mt from the previous trading day, while the average price of SX-EW copper was 79,165 yuan/mt, up 520 yuan/mt. Overall, inventory fell for the fifth consecutive day, and suppliers intended to refuse to budge on prices, but actual transactions were moderate, and overall trading was weaker than last Friday.
(3) Imported copper: On August 25, warrant prices were $45-57/mt, QP August, with the average price flat from the previous trading day. B/L prices were $50-68/mt, QP September, with the average price flat from the previous trading day. EQ copper (CIF B/L) was $24-34/mt, QP September, with the average price up $1/mt from the previous trading day. Quotations referred to cargoes arriving in late August and mid-to-early September. LME copper was closed yesterday, and few traders offered.
(4) Secondary copper: On August 25, prices of recycled copper raw materials rose 200 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,200-73,400 yuan/mt, up 200 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,551 yuan/mt, up 467 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 970 yuan/mt. According to the SMM survey, the impact of policies continues to spread. A secondary copper rod enterprise in Anhui said that if the policy cannot be implemented by September, it will choose to temporarily suspend production. Currently, only enterprises in Jiangxi and Anhui have clearly stated they will suspend production, while enterprises in other regions are maintaining normal production or reducing operating rates. According to SMM estimates, due to enterprise suspensions, national secondary copper rod production in August fell by about 30%, a reduction of 48,800 mt.
(5) Inventory: On August 21, LME copper cathode inventories decreased by 375 mt to 155,975 mt; on August 25, SHFE warrant inventories decreased by 401 mt to 23,747 mt.
Price: On the macro front, oil prices climbed about 2% on Monday, extending last week's gains, as the market anticipated more US sanctions on Russian oil and potential supply disruptions from Ukrainian attacks on Russian energy infrastructure, with copper prices following the upward trend. Supply side, imported copper cathode arrivals are expected to be limited, while domestic copper cathode supply is gradually being replenished in small amounts; total supply is expected to increase slightly WoW. Demand side, due to month-end funding pressure coupled with copper prices fluctuating at highs, downstream purchase willingness was suppressed. As of Monday, August 25, SMM's national mainstream copper inventories decreased by 9,000 mt WoW to 123,000 mt. Price side, the market is currently digesting Powell's remarks, and the US dollar rebounding from lows is limiting copper price gains. Attention should be paid to speeches by US Fed officials later today to see if they hold the same policy views as Powell. Overall, with the US dollar strengthening, copper prices are expected to have limited upside today.
[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.]