US Fed Governor Renews Call for Interest Rate Cut, Overnight Copper Prices Edge Up [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,791.5/mt overnight, touched a low of $9,781/mt at the beginning of the session, then fluctuated upward to a high of $9,738.5/mt toward the end of the session, and finally closed at $9,839.5/mt, up 0.68%. Trading volume reached 14,000 lots, and open interest stood at 268,000 lots. The most-traded SHFE copper contract 2510 opened at 78,920 yuan/mt overnight, touched a low of 78,830 yuan/mt at the beginning of the session, rose to a high of 79,060 yuan/mt during the session, then fluctuated rangebound and finally closed at 78,990 yuan/mt, up 0.22%. Trading volume was 17,000 lots, and open interest was 168,000 lots.
[SMM Copper Morning Meeting Summary] News: (1) On Wednesday, August 27, Canadian mining company Hudbay Minerals announced that it had resumed operations at its Snow Lake mine in Manitoba after the mandatory evacuation order was lifted on August 22. The company stated that the surface infrastructure and plant facilities at the Snow Lake site did not suffer structural damage. In early July, Hudbay suspended operations at the Snow Lake mine due to wildfires in northern Manitoba.
Spot: (1) Shanghai: On August 28, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 130-280 yuan/mt, with an average premium of 205 yuan/mt, up 35 yuan/mt from the previous trading day. SMM #1 copper cathode prices ranged from 79,080 to 79,300 yuan/mt. In the morning session, SHFE copper futures gradually rose from 78,900 yuan/mt to 79,020 yuan/mt, then continued to weaken. Futures declined, and positions were significantly reduced in the morning. The backwardation spread between nearby months widened, fluctuating between 20-50 yuan/mt. The import loss for the front-month SHFE copper contract narrowed to around 110 yuan/mt. As it was Friday and the last trading day of the month, spot premiums were expected to be contested, and Shanghai spot copper premiums were likely to maintain the current trend.
(2) Guangdong: On August 28, 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 40-20 yuan/mt, with an average discount of 30 yuan/mt, down 10 yuan from the previous trading day. The average price of Guangdong #1 copper cathode was 79,030 yuan/mt, down 435 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,935 yuan/mt, down 445 yuan/mt. Notably, recent arrivals of imported copper have increased, and the price spread between SX-EW copper and standard-quality copper has widened.
(3) Imported copper: On August 28, warrant prices were $49-61/mt, QP August, with the average price up $2/mt from the previous trading day. B/L prices were $54-66/mt, QP September, with the average price down $1/mt from the previous trading day. EQ copper (CIF B/L) was $22-34/mt, QP September, with the average price down $1/mt from the previous trading day. Quotations referred to cargoes arriving in late August and early to mid-September. Overall, short-term arbitrage activities increased, and warrants were tight.
(4) Secondary copper: On August 28, the price of recycled copper raw materials fell 200 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,100-73,300 yuan/mt, down 200 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 1,253 yuan/mt, down 192 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 760 yuan/mt. According to the SMM survey, some suppliers of recycled copper raw materials in the market are bullish on future copper prices and are actively stockpiling recycled copper raw materials, expected to reach up to 80% of maximum warehouse storage capacity. Even if policy changes cause secondary copper rod enterprises to lower the price of recycled copper raw materials, the absolute price of recycled copper raw materials will rise driven by higher copper prices, allowing suppliers of recycled copper raw materials to adapt to price fluctuations caused by policy changes in a short period of time.
(5) Inventory: On August 27, LME copper cathode inventories increased by 1,850 mt to 157,950 mt. On August 28, SHFE warrant inventories decreased by 55 mt to 21,232 mt.
Prices: On the macro front, US Fed Governor Waller once again called for an interest rate cut, stating that he would support a 25-basis-point cut in September and anticipating further cuts in the next three to six months, with the pace depending on newly released data. Additionally, as a meeting between Russian and Ukrainian leaders appeared nearly hopeless, dampening hopes for a peace process between the two countries, international crude oil reversed its decline during the session, achieving two consecutive weekly gains. Overall, macro factors are bullish for copper prices. On the fundamentals side, supply side, a large amount of imported copper has arrived, and domestic supply is steadily replenishing, making spot copper supply relatively ample. Spot supply is expected to continue growing next week. Consumption side, as the off-season gradually ends, downstream consumption is expected to recover. As of Thursday, August 28, SMM's national mainstream copper inventories increased by 4,100 mt from Monday to 127,100 mt, but decreased by 4,600 mt WoW from the previous Thursday. Price side, macro and fundamental factors are expected to resonate, providing some support for copper prices 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.]