JX Plans Production Cuts for Copper Cathode, SHFE Copper Fluctuates Lower [SMM Copper Morning Meeting Summary]

Tuesday, September 9, 2025

Futures: Overnight, LME copper opened and touched a low at $9,910.5/mt, initially moved lower and touched a low at $9,890/mt, then fluctuated upward all the way and touched a high at $9,937.5/mt near the end of the session, pulled back slightly at the end and finally closed at $9,906.5/mt, up 0.42%, with trading volume reaching 14,000 lots and open interest reaching 290,000 lots. Overnight, the most-traded SHFE copper 2510 contract opened at 79,690 yuan/mt, initially moved lower and touched a low at 79,530 yuan/mt, then fluctuated considerably upward all the way and touched a high at 79,790 yuan/mt near the end of the session, pulled back slightly at the end and finally closed at 79,620 yuan/mt, down 0.14%, with trading volume at 17,000 lots and open interest at 175,000 lots.

[SMM Copper Morning Meeting Minutes] News:

(1) On September 5, 2025, Reuters Tokyo: Yoshiichi Hayashi, president of JX Advanced Metals, stated that due to tight concentrate supply and low TC/RC eroding profits, the company plans to reduce copper cathode production by tens of thousands of metric tons in fiscal year 2025 compared to the original plan; in the long term, it may shrink its smelting capacity of about 450,000 mt/year and accelerate the transition to recycling and semiconductor materials. In terms of impact on China, about half of JX's refined copper exports go to China. If production is cut, it will tighten Japan's supply to China, but China's new smelting capacity and the "zero TC/RC" deal with Antofagasta may still depress global TC/RC and continue to squeeze overseas smelters.

Spot:

(1) Shanghai: On September 8, SMM #1 copper cathode spot prices against the front-month 2509 contract were reported at a premium of 40-220 yuan/mt, with the average price quoted at a premium of 130 yuan/mt, down 35 yuan/mt from the previous trading day; SMM #1 copper cathode prices were 79,740-80,000 yuan/mt. In the morning, SHFE copper fluctuated between 79,700-79,790 yuan/mt, and after 10:30, it fell to around 79,650 yuan/mt. The intermonth price spread held firm at around back 50 yuan/mt, showing signs of widening; the import loss for SHFE copper narrowed to 200 yuan/mt. For today, with continuous import replenishment, such cargoes are difficult to sell at high prices, and a discount is expected tomorrow. However, domestic cargoes and warrant volumes are low, and prices are expected to hold firm above parity ahead of delivery. Pay attention to the guidance from the widening intermonth spread.

(2) Guangdong: On September 8, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a premium of 10-70 yuan/mt, with the average premium at 40 yuan/mt, flat from the previous trading day; SX-EW copper was reported at a discount of 70-50 yuan/mt, with the average discount at 60 yuan/mt, flat from the previous trading day. The average price of Guangdong #1 copper cathode was 79,785 yuan/mt, down 85 yuan/mt from the previous trading day, and the average price of SX-EW copper was 79,685 yuan/mt, down 85 yuan/mt. Overall, the expanded price spread between futures contracts boosted suppliers' willingness to offload cargo, with overall trading activity slightly better than last Friday.

(3) Imported copper: On September 8, warrant prices stood at $53-63/mt (QP September), with the average price up $1/mt from the previous trading day. B/L prices were $55-67/mt (QP October), averaging $1/mt higher than the prior session. EQ copper (CIF B/L) was quoted at $27-35/mt (QP October), unchanged on average from the previous day. Offers referenced cargoes arriving in mid-to-late September.

(4) Secondary copper: At 11:30 on September 8, the futures closing price was 79,650 yuan/mt, down 450 yuan/mt from the previous session. The average spot premiums/discounts were 130 yuan/mt, declining 35 yuan/mt day-on-day. Today, recycled copper raw material prices fell 300 yuan/mt WoW. Guangdong bare bright copper traded at 73,400-73,600 yuan/mt, down 300 yuan/mt from the prior day. The price difference between copper cathode and copper scrap narrowed to 1,589 yuan/mt, down 165 yuan/mt WoW. The price spread between copper cathode rod and secondary copper rod was 805 yuan/mt. According to the SMM survey, enterprises reported that delayed policy implementation has made secondary copper rod producers hesitant to restart production, with only recycled raw material procurement resuming this week. Offers were generally below market prices to hedge against potential additional costs from sudden policy enforcement. A few enterprises even indicated they might consider relocating to other provinces if policies remain unresolved after the National Day holiday.

(5) Inventories: On September 5, LME copper cathode inventories decreased by 2,125 mt to 155,825 mt. SHFE warrant stocks dropped by 1 mt to 18,926 mt on September 8.

Prices: On the macro front, weak US labor data and expectations for a US Fed interest rate cut next week extended the US dollar index's decline on Monday, providing bullish support for copper prices. However, market focus remains on upcoming inflation data, which will influence expectations for the Fed's rate cut magnitude. Additionally, the EU's consideration of new sanctions targeting Russian banks and oil trade boosted safe-haven sentiment, keeping gold at elevated levels. Supply side, spot copper supply remained ample due to weekend import arrivals and domestic replenishments. Demand side, despite copper prices pulling back, they continued to fluctuate at highs, keeping overall procurement sentiment weak without forming effective demand support. As of Monday, September 8, SMM's mainstream domestic copper inventories rose by 6,300 mt WoW to 146,900 mt. Price-wise, the market is in a key data vacuum period awaiting clear guidance from Wednesday's US PPI and Thursday's CPI releases. The dollar index is expected to remain under short-term pressure, with copper prices likely to fluctuate rangebound 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.]