Chile's Mine Production Declined, Copper Prices Edged Lower Overnight [SMM Copper Morning Meeting Minutes]

Futures: LME copper opened at and touched a high of $9,916.5/mt overnight, then fluctuated downward and finally closed at a low of $9,875/mt, down 0.31%, with trading volume reaching 10,000 lots and open interest reaching 269,000 lots. The most-traded SHFE copper 2510 contract opened at 79,640 yuan/mt overnight, touched a high of 79,810 yuan/mt in early trading, then fluctuated downward to a low of 79,560 yuan/mt, and subsequently moved sideways before finally closing at 79,660 yuan/mt, down 0.06%, with trading volume reaching 16,000 lots and open interest reaching 179,000 lots.

[SMM Copper Morning Meeting Minutes] News:

(1) On Monday, September 1, data released by the Central Bank of Chile showed that Chile's economic activity slowed down in terms of YoY growth rate in July, dragged down by a decline in the key mining sector. The bank stated that mining in Chile, the world's largest copper producer, shrank by 3.3% YoY, affected by declines in copper, iron ore, and lithium production in July.

(2) According to the BNAmericas website, government data from Argentina showed that the country's mineral exports reached a cumulative $3.16 billion in the first seven months, up 44% YoY, 50% higher than the average level from 2010 to 2024. This growth trend is expected to continue, reaching $20 billion by 2030. The Argentine government believes that the country's copper export value will reach $3 billion in 2029 and peak at $11.7 billion in 2033, before gradually stabilizing.

Spot:

(1) Shanghai: On September 1, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 150-320 yuan/mt, with an average premium of 235 yuan/mt, down 15 yuan/mt from the previous trading day; SMM #1 copper cathode prices were 79,710-80,090 yuan/mt. In early trading, SHFE copper fluctuated from 79,650 yuan/mt, dipped slightly to 79,540 yuan/mt, then staged a rally, rising to 79,690 yuan/mt before the end of the morning session. The price spread between futures contracts continued to fluctuate between BACK 10-40 yuan/mt, with the front-month import loss near 150 yuan/mt. Looking ahead to today, social inventory in Shanghai continued to draw down slightly at the beginning of the week, and shipments from surrounding smelters were limited in the short term. Although import arrivals increased in the short term, they were insufficient to fill the demand gap. Premiums are expected to remain firm tomorrow.

(2) Guangdong: On September 1, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a premium of 10-70 yuan/mt, with an average premium of 40 yuan/mt, down 20 yuan/mt from the previous trading day; SX-EW copper was reported at a discount of 70-50 yuan/mt, with an average discount of 60 yuan/mt, down 20 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 79,715 yuan/mt, up 525 yuan/mt from the previous trading day, and the average price of SX-EW copper was 79,615 yuan/mt, up 525 yuan/mt from the previous trading day. Overall, downstream restocking volume increased slightly amid lower premiums, and overall trading activity improved.

(3) Imported copper: On September 1, warrant prices stood at $49-61/mt with QP September, with the average price flat from the previous trading day. B/L prices were $52-64/mt with QP October, down $1/mt from the previous trading day. EQ copper (CIF B/L) was quoted at $21-33/mt with QP October, also down $1/mt from the previous trading day, referencing cargoes arriving in mid-September.

(4) Secondary copper: At 11:30 on September 1, the futures closing price was 79,700 yuan/mt, up 520 yuan/mt from the previous trading day. The average spot premium/discount was 235 yuan/mt, down 15 yuan/mt from the previous trading day. Today, recycled copper raw material prices rose 300 yuan/mt MoM. Guangdong bare bright copper prices were 73,500-73,700 yuan/mt, up 300 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap widened to 1,637 yuan/mt, up 1,637 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,070 yuan/mt. According to the SMM survey, secondary copper rod enterprises have not yet received specific policy implementation notices. However, due to production cuts and shutdowns at many secondary copper rod enterprises, the volume of secondary copper rods available in the market is limited, with most supply concentrated in traders' hands. Today, the price difference between copper cathode rod and secondary copper rod exceeded 1,000 yuan/mt, and the theoretical gross sales profit of secondary copper rods turned positive from negative. Policy uncertainties have helped secondary copper rod sales turn losses into profits, with many enterprises indicating they will resume production and procurement only after further policy clarity.

(5) Inventory: On August 29, LME copper cathode inventories decreased by 25 mt to 158,875 mt. On September 1, SHFE warrant inventories dropped by 1,212 mt to 20,200 mt.

Prices: On the macro front, US Treasury Secretary Besant stated that Trump may declare a national housing emergency this fall, with potential measures including tariff exemptions for building materials, and expressed confidence that the Supreme Court would uphold his tariff policies. Meanwhile, the US Fed is expected to welcome new governor Stephen Milan. Additionally, the US government is pushing to use AI to significantly cut financial regulations, a move that could increase market volatility. Currently, the macro front lacks new catalysts, with attention focused on the upcoming US S&P Global Manufacturing PMI final reading tonight. On the fundamentals, supply remains stable, with both imported and domestic copper cathode cargoes arriving normally, keeping market supply relatively ample. Consumption remains weak, as high copper prices suppress downstream purchase willingness, and market sentiment remains cautious. As of Monday, September 1, SMM mainstream regional copper inventories increased by 5,000 mt WoW to 132,100 mt. Overall, the macro front lacks new drivers, while fundamentals show ample supply and weak demand, suggesting copper prices may face upward pressure today.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution in decision-making and not use it to replace independent judgment. Any decisions made by clients are unrelated to SMM.]