US PPI Slows More Than Expected, Weakening Rate Hike Expectations; Geopolitical Conflicts Persist, Copper Prices Under Pressure, Closing Lower [SMM Copper Morning Brief]

Thursday, July 16, 2026
Market: Overnight LME copper opened at $13,602/mt, rose to touch a high of $13,644/mt early on, then drifted lower to $13,532/mt, and finally settled at $13,581/mt, down 0.14%, with a trading volume of 15,000 lots and open interest at 241,000 lots, a decrease of 1,977 lots from the previous session, indicating long liquidation. The most-traded SHFE copper 2608 contract opened at 104,520 yuan/mt overnight, edged up to 104,680 yuan/mt early on, then drifted lower to touch a low of 103,940 yuan/mt, and finally settled at 104,040 yuan/mt, down 0.17%, with a trading volume of 17,000 lots and open interest at 138,000 lots, down 2,001 lots from the previous session, indicating long liquidation.
[SMM Copper Morning Meeting Summary] News:
(1) On Wednesday, July 15, Chilean miner Antofagasta reported that its H1 copper production fell 9.5% YoY to 285,000 mt, due to lower output from two key mines. However, the company said it expects to meet its copper output target this year, as production is expected to increase in H2. Due to supply disruptions in oil and other raw material markets, inflationary pressures persist in the mining industry, and CEO Ivan Arriagada said in a statement that the company will focus on the supply chain to secure raw material procurement.
Spot:
(1) Shanghai: On the morning of July 15, the SHFE copper 2607 contract consolidated sideways in a slight overall decline. It opened at 105,310 yuan/mt, then mostly traded between 105,000 yuan/mt and 105,440 yuan/mt, with the overall price center edging down, and closed at 105,020 yuan/mt. The SHFE copper 2608 contract traded mostly between 104,660 yuan/mt and 104,920 yuan/mt. The price spread between the two front-month backwardation contracts ranged from 290 yuan/mt to 440 yuan/mt. The import profit margin for SHFE copper against the front-month 2607 contract ranged from a profit of 400 yuan/mt to 580 yuan/mt. Looking ahead to today, the open interest of the SHFE copper 2607 contract is under 2,000 lots, and the 07 contract maintains a high backwardation structure against the 08 contract. After contract rollover, the market will officially price based on the 2608 contract. Supply side, social inventory has been destocking recently, arrivals of both domestic and imported supplies at some warehouses have been low, and the tightness in available spot cargoes is unlikely to ease significantly in the short term. LME published data shows that the ratio of cancelled warrants has been rising, and with the import window opening, the increase in subsequent import arrivals is expected to improve. According to SMM, some warrants have already been cancelled from LME and shipped to the Chinese market, expected to arrive by month-end or early next month. Demand side, downstream acceptance of high premiums is limited, market transactions are sluggish, and suppliers had to continuously lower their quotes to secure deals. As SMM always quotes against the front-month contract, spot premiums have quickly recovered due to the backwardation structure. Overall, with the support of the backwardation structure and weakening downstream consumption, spot copper against the SHFE 2608 contract is expected to remain at a premium today.
(2) Guangdong: On July 15, spot #1 copper cathode against the front-month contract in Guangdong: high-quality copper was quoted at 80 yuan/mt, flat MoM; standard-quality copper was quoted at a discount of 20 yuan/mt, flat MoM; SX-EW copper was quoted at a discount of 80 yuan/mt, flat MoM. The average price of #1 copper cathode in Guangdong was 105,205 yuan/mt, up 1,100 yuan/mt from the previous trading day, and the average price of SX-EW copper was 105,095 yuan/mt, up 1,085 yuan/mt from the previous trading day. Overall, the wide price spread between futures contracts due to contract rollover kept spot trades quiet.
(3) Imported copper: On July 15, the average warrant price was flat MoM at $90/mt (price range: $85-95/mt); the average B/L price was flat MoM at $89/mt (price range: $83-95/mt); the average price of EQ copper (CIF B/L) rose $1/mt from the previous trading day to $57/mt (price range: $53-61/mt), with quotes referencing cargoes arriving from mid-July to mid-August.
(4) Secondary copper: On July 15, as of 11:30, the futures closing price was 105,020 yuan/mt, up 710 yuan/mt from the previous trading day. The average spot premium was 0 yuan/mt, down 155 yuan/mt MoM. Secondary copper raw material prices rose 500 yuan/mt MoM. The secondary copper raw material sales sentiment index rose to 2.48, and the purchasing sentiment index rose to 2.31. The price difference between copper cathode and copper scrap was 3,176 yuan/mt, down 4 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,510 yuan/mt. According to an SMM survey, copper prices retreated after a rapid rise. During the early session, secondary copper raw material suppliers actively shipped, and secondary copper rod enterprises were also willing to purchase. Due to a significant increase in market circulation of secondary copper raw materials, many secondary copper rod enterprises had already procured sufficient volumes during the early session and ceased quoting prices by the end of the morning session.
Prices: On the macro front, the US June CPI and PPI both came in below expectations—PPI fell 0.3% MoM (against expectations of flat), and the YoY growth rate narrowed significantly from 5.5%; core PPI YoY growth slowed to 4.7% and rose only 0.2% MoM, both lower than market expectations, further weakening market expectations for a US Fed rate hike this year. However, Fed Chairman Warsh expressed dissatisfaction with any inflation indicators, striking a hawkish tone. On the geopolitical front, Trump indicated that Iran seeks a meeting, but Trump's side is leaning towards expanding military operations, including the option of seizing Khark Island; Iran stated it would not proactively request negotiations, has no current negotiation plans, and is focused on defense. Additionally, Vance accused some within Israel of manipulating US public opinion to prolong military operations. Overall, easing inflation data tempered rate hike expectations, but escalating geopolitical conflicts weighed down copper prices. Fundamentals side, the supply-side tightness persisted, with low arrivals of both imported and domestic copper; the demand side remained in the traditional off-season, with downstream users only maintaining restocking for essential needs. Overall, copper prices are expected to drift slightly lower today.
[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions prudently and not use this as a replacement for their own independent judgment. Any decisions made by the client are not related to SMM.]