Ivanhoe's Kamoa Copper Mine to Resume Capacity in Early Next Year [SMM Copper Morning Meeting Summary]

Futures: LME copper opened at $9,899/mt on Friday night, initially touched a low of $9,881/mt, then entered sideways movement with prices gradually moving upward, nearing a high of $9,924.5/mt before closing at $9,906/mt, up 0.68%. Trading volume reached 23,000 lots, and open interest stood at 268,000 lots. The most-traded SHFE copper contract 2510 opened at 79,670 yuan/mt on Friday night, initially fluctuated downward to a low of 79,460 yuan/mt, then gradually moved upward, nearing a high of 79,730 yuan/mt before closing at 79,680 yuan/mt, up 0.58%. Trading volume reached 23,000 lots, and open interest stood at 174,000 lots.

[SMM Copper Morning Meeting Summary] News: (1) According to the website, Ivanhoe Mines stated that dewatering in the eastern section of the Kamoa-Kakula copper mine, Africa's largest copper producer, will allow the mine to resume capacity early next year. Meanwhile, the company will provide new production targets in the coming weeks. (2) On August 29 (Friday), Chile's National Statistics Institute (INE) reported that Chile's copper production in July increased slightly by 0.3% YoY to 445,214 mt.

Spot:

(1) Shanghai: On August 29, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 140-360 yuan/mt, with an average premium of 45 yuan/mt, up 45 yuan/mt from the previous trading day; SMM #1 copper cathode prices ranged from 79,250 to 79,530 yuan/mt. In early trading, SHFE copper rose continuously from 79,050 yuan/mt, then fluctuated repeatedly in the range of 79,100-79,160 yuan/mt, touching 79,160 yuan/mt multiple times. The price spread between nearby months continued to fluctuate around BACK 20 yuan/mt, with the front-month import loss near 100 yuan/mt. Electrolytic copper production from scrap is expected to decline significantly next month, and premiums are likely to rise.

(2) Guangdong: On August 29, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a premium of 30-90 yuan/mt, with an average premium of 60 yuan/mt, down 5 yuan/mt from the previous trading day; SX-EW copper was reported at a discount of 30-40 yuan/mt, with an average discount of 35 yuan/mt, down 5 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 79,190 yuan/mt, up 160 yuan/mt from the previous trading day, while the average price of SX-EW copper was 79,090 yuan/mt, up 155 yuan/mt from the previous trading day. 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 29, warrant prices were $49-61/mt, QP August, with the average price flat from the previous trading day; B/L prices were $52-66/mt, QP September, with the average price flat from the previous trading day; EQ copper (CIF B/L) was $22-34/mt, QP September, with the average price flat from the previous trading day. Quotations refer to cargoes arriving in late August and early to mid-September. Overall, B/L demand was low, and the warrant premium showed a continuous upward trend.

(4) Secondary copper: Last week, copper prices first fell and then rose, increasing by 310 yuan/mt. The price of bare bright copper in Guangdong was 73,100–73,300 yuan/mt, up 100 yuan/mt. As the new policy approaches implementation, although it will cancel subsidies and tax rebates for secondary copper rod enterprises, forcing them to lower the price of recycled copper raw materials to control costs, some secondary copper raw material traders are bullish on future copper prices and are actively stockpiling recycled copper raw materials. A few traders even reached an inventory level of 80%, nearly full capacity.

(5) Inventories: On August 28, LME copper cathode inventories increased by 950 mt to 158,900 mt; on August 29, SHFE warrant inventories increased by 180 mt to 21,412 mt.

Prices: On the macro front, Russia and Ukraine continued to exchange fire in Donetsk, and Ukraine planned to launch new strikes inside Russia. Meanwhile, the Middle East situation also heated up, with the Houthis declaring readiness to confront Israel, the Israeli military continuing operations in Gaza, and Turkey announcing a complete cut in economic ties with Israel. In addition, the US Fed’s Daly again hinted at a possible interest rate cut in September. Although the US core PCE rose to 2.9% YoY in July, it met expectations, and traders continued to bet on a September rate cut, providing a boost to copper prices on the macro front. On the fundamentals side, imported supplies provided limited market replenishment, especially with tight availability of high-quality copper, resulting in an overall tight pattern. With the arrival of the traditional September-October peak season, downstream demand gradually recovered. Considering both macro and fundamental factors, copper prices are expected to find support 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.]