Geopolitical Tensions Continue to Pressure Copper Prices Gresik Expects to Resume Production in September [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,788/mt overnight, initially touched a high of $9,789/mt, then fluctuated downward to a low of $9,730.5/mt during the session, and rebounded in a "V-shaped" pattern at the tail end, finally closing at $9,773.5/mt, down 0.74%. Trading volume reached 16,000 lots, and open interest stood at 266,000 lots. The most-traded SHFE copper contract 2510 opened at 78,820 yuan/mt overnight, initially touched a low of 78,660 yuan/mt, fluctuated upward during the session to a high of 78,880 yuan/mt, then maintained rangebound fluctuations, finally closing at 78,850 yuan/mt, down 0.63%. Trading volume was 37,000 lots, and open interest was 169,000 lots.
[SMM Copper Morning Meeting Minutes] News: (1) A spokesperson for PT Freeport Indonesia stated that maintenance at its joint-venture smelter in East Java is expected to be completed in early September. The company indicated that repairs to the oxygen plant delayed the startup of the Gresik smelter, a joint venture between Freeport Indonesia and Mitsubishi Materials Corp, which has been under maintenance for the past month.
Spot: (1) Shanghai: On August 27, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 80-260 yuan/mt, with an average premium of 170 yuan/mt, up 40 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged from 79,420 to 79,670 yuan/mt. In early trading, the SHFE copper 2509 contract briefly touched 79,470 yuan/mt before declining, probing a low of 79,330 yuan/mt around 11:00 am. The price spread between nearby futures contracts continued to fluctuate near 0. Import losses for SHFE front-month copper were around 200 yuan/mt. Recent import supplements have been limited. As month-end approaches, market trading sentiment has further weakened, and Shanghai spot copper premiums are expected to remain stagnant.
(2) Guangdong: On August 27, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a premium of 40-90 yuan/mt, with an average premium of 65 yuan/mt, flat from the previous trading day. SX-EW copper was reported at a discount of 30-10 yuan/mt, with an average discount of 20 yuan/mt, flat from the previous trading day. The average price of Guangdong #1 copper cathode was 79,465 yuan/mt, down 90 yuan/mt from the previous trading day, while the average price of SX-EW copper was 79,380 yuan/mt, down 90 yuan/mt. Guangdong inventory has declined for seven consecutive days, with arrivals remaining low. As month-end approaches, downstream procurement enthusiasm is not high. Suppliers intended to refuse to budge on prices, but actual transactions were difficult, and final transaction prices could only match yesterday's levels.
(3) Imported copper: On August 27, warrant prices were $47-59/mt, QP August, with the average price flat from the previous trading day; B/L prices were $54-68/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 flat from the previous trading day. Quotations referred to cargoes arriving in late August and mid-to-early September. During the day, there were many seller offers for B/Ls, while buyer inquiries were mostly focused on warrants, resulting in limited market transactions.
(4) Secondary copper: On August 27, the prices of recycled copper raw materials remained flat MoM. The price of bare bright copper in Guangdong was 73,300-73,500 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,445 yuan/mt, down 20 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 960 yuan/mt. According to the SMM survey, changes in new policies starting from September may affect the production of secondary copper anodes. In addition, smelters will enter equipment maintenance period in September. To ensure that copper cathode production is not affected, the supply of copper anodes must not decline significantly. Therefore, smelters' RC for copper anodes in September approached a record low.
(5) Inventory: On August 26, LME copper cathode inventories increased by 1,100 mt to 156,100 mt. On August 27, SHFE warrant inventories decreased by 1,630 mt to 21,287 mt.
Prices: On the macro front, Bassett called for an internal review at the US Fed and stated that Trump's choice for Fed Chairman would definitely be known in the fall. The crisis of the Fed's independence intensified, and the US dollar index showed an "inverted V" trend, with copper prices falling first and then rising. Meanwhile, Trump warned Putin that if the conflict did not end, an economic war would begin, triggering market risk-off sentiment and creating headwinds for copper prices. On the fundamentals, supply side, imported supplies were limited, and high-quality copper supplies were tight, resulting in overall tight supply. Demand side, approaching month-end, some customers did not handle cargoes with invoices dated next month, and downstream maintained just-in-time procurement, with overall market transactions being average. Price side, affected by macro headwinds and weak fundamentals on both supply and demand, copper prices were expected to encounter resistance 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.]