Overnight LME Copper Opens Lower but Rises SHFE Copper Shows Strong Support [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,791.5/mt overnight, initially touched a low of $9,776.5/mt, then rose continuously and approached a high of $9,859.5/mt near the end of the session, before pulling back slightly to close at $9,846.5/mt, up 0.38%, with trading volume reaching 16,000 lots and open interest at 269,000 lots. The most-traded SHFE copper contract 2510 opened and touched a low of 79,290 yuan/mt overnight, then fluctuated upward to a high of 79,580 yuan/mt during the session, before pulling back in an "inverted V" pattern to close at 79,420 yuan/mt, down 0.05%, with trading volume at 20,000 lots and open interest at 177,000 lots.

[SMM Copper Morning Meeting Minutes] News: (1) First Quantum Minerals Ltd. shelved plans to sell a minority stake in its Zambian copper mines after a $1 billion gold streaming deal eased pressure on its balance sheet. Early last year, the company said it was considering selling minority stakes in its Zambian Kansanshi and Sentinel operations after being forced to close its flagship mine in Panama at the end of 2023. CEO Tristan Pascall said the deal with Royal Gold Inc. this month to sell part of Kansanshi's gold output helped change the necessity of asset divestment.

Spot: (1) Shanghai: On August 26, SMM #1 copper cathode spot prices against the front-month 2509 contract were at a premium of 80-180 yuan/mt, with the average premium at 130 yuan/mt, down 10 yuan/mt from the previous trading day; SMM #1 copper cathode prices ranged from 79,480 to 79,690 yuan/mt. In early trading, the SHFE copper 2509 contract continued to fall from 79,560 yuan/mt, then fluctuated around 79,510 yuan/mt, and after 10:30 am, fell to around 79,420 yuan/mt. The price spread between futures contracts jumped between Contango and Back, and spot imports of SHFE copper were at a loss of around 250 yuan/mt. Currently, with copper prices high, downstream buying has weakened, but the occasional Contango structure in nearby months has also made suppliers reluctant to sell at low prices, and spot premiums are expected to have limited downside room.

(2) Guangdong: On August 26, Guangdong #1 copper cathode spot prices against the front-month contract were at a discount of 40 yuan/mt to a premium of 90 yuan/mt, with the average premium at 65 yuan/mt, up 5 yuan/mt from the previous trading day; SX-EW copper was quoted at a discount of 30-10 yuan/mt, with the average discount at 20 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 79,555 yuan/mt, up 300 yuan/mt from the previous trading day, and the average price of SX-EW copper was 79,470 yuan/mt, up 305 yuan/mt from the previous trading day. Overall, inventory fell for the sixth consecutive day, and suppliers continued to refuse to budge on prices, but downstream buyers were unwilling to purchase more, and overall transactions were moderate.

(3) Imported copper: On August 26, the warrant price ranged from $47/mt to $59/mt, with QP in August. The average price increased by $2/mt from the previous trading day. The B/L price ranged from $54/mt to $68/mt, with QP in September. The average price increased by $2/mt from the previous trading day. EQ copper (CIF B/L) ranged from $24/mt to $34/mt, with QP in September. The average price remained unchanged from the previous trading day. Quotations referenced cargo arrivals in late August and early-to-mid September. Overall, warrant and B/L transactions remained active, with transaction premiums rising.

(4) Secondary copper: On August 26, the price of recycled copper raw materials increased by 100 yuan/mt MoM. The price of bare bright copper in Guangdong ranged from 73,300 yuan/mt to 73,500 yuan/mt, up by 100 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,465 yuan/mt, down by 86 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 940 yuan/mt. According to an SMM survey, amid policy changes, some enterprises temporarily halted procurement before resuming it today. However, certain enterprises in Anhui have reduced their capacity to the minimum and plan to adjust their procurement model for recycled copper raw materials if the policy is officially implemented starting September 1.

(5) Inventory: On August 25, LME copper cathode inventories decreased by 975 mt to 155,000 mt. On August 26, SHFE warrant inventories decreased by 830 mt to 22,917 mt.

Price: On the macro front, Trump's attempt to dismiss US Fed Governor Cook, his statement that he already had a candidate in mind to replace Cook, and his assertion that he would soon secure a majority on the US Fed raised concerns about central bank independence, causing the US dollar index to pull back slightly. However, it remained above the 98 threshold. Overnight copper prices initially fell and then rose. Additionally, Trump indicated that high tariffs on items such as furniture would soon be introduced, increasing uncertainty in trade relations and limiting gains in copper prices. On the fundamental front, supply side, high-quality copper supply slightly increased, while registered SX-EW copper remained scarce, resulting in tight overall spot supply. On the demand side, affected by copper prices fluctuating at highs, downstream procurement sentiment remained suppressed. Regarding prices, concerns over tariffs, potential disruptions to Russian oil supplies, and worries about US Fed independence boosted risk aversion sentiment. Copper prices are expected to encounter resistance today.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make cautious decisions and not rely solely on this information as a substitute for independent judgment. Any decisions made by clients are unrelated to Shanghai Metals Market.]