LME and SHFE Copper Both Close Lower, Spot Premiums Remain Firm [SMM Copper Morning Meeting Summary]

Thursday, August 27, 2026
Futures: Overnight LME copper opened at $14,339/mt, edged up to an intraday high of $14,363/mt in early trading, then drifted lower to hit a low of $14,220/mt before settling at $14,232.5/mt, down 0.64%. Trading volume reached 20,000 lots, while open interest stood at 266,000 lots, an increase of 1,868 lots from the previous session, reflecting bearish position building. The most-traded SHFE copper 2610 contract opened at 108,480 yuan/mt overnight, touched a high of 108,630 yuan/mt, then drifted lower to a low of 108,040 yuan/mt and finally closed at 108,220 yuan/mt, down 0.49%. Trading volume was 38,000 lots and open interest was 215,000 lots, down 6,564 lots from the prior session, indicating bullish position reduction.
[SMM Copper Morning Briefing] News:
(1) On Tuesday, August 25, Zambia’s copper production fell in Q1 2026, underscoring the gap between nearly $10 billion in pledged mining investment and the growth needed to meet the government’s output target. First-quarter production was 208,993 mt, down 4.3% compared to the same period last year, a disappointing start for the pace of expansion required by President Hakainde Hichilema’s administration. The government’s National 3 Million Tonnes Copper Output Strategy aims to reach annual production of 3 million mt by 2031, more than triple Zambia’s 890,346 mt in 2025. Output in 2025 was up 8% from 825,500 mt in 2024, and also higher than the 732,580 mt produced in 2023, but still fell short of the government’s 1 million mt target for that year. Achieving 3 million mt by 2031 would require growth of around 22% per year over the decade, a pace analysts consider extremely challenging and one Zambia has not sustained even during earlier copper booms. The government has attracted nearly $10 billion in mining investment commitments since 2021, though officials acknowledge the figure reflects pledged investment rather than independently verified actual capital. Several major projects are still under construction and are not yet fully reflected in production data. These include Barrick’s Lumwana mine expansion, Vedanta’s investment in Konkola Copper Mines—whose output quadrupled to over 80,000 mt during the 2025 recovery—and KoBold Metals’ Mingomba project. Hichilema has said Mingomba could become one of the world’s largest mines once fully operational. Power supply remains a key constraint. According to World Bank data, mining consumes around half of Zambia’s electricity. Industry executives estimate the country needs roughly an additional 2,000 megawatts (MW) of generation capacity to support the 3 million mt target. Zambia’s Energy Regulation Board said it approved 16 utility-scale power projects in H1 2026 with proposed capacity of over 1.1 GW, but none of that power is yet available to mines. Higher copper prices provide extra impetus. Benchmark copper prices hovered near $14,000/mt in early August, over 40% higher than a year earlier. The International Energy Agency (IEA) projects a global copper supply gap of around 25% by 2035 under its stated policies scenario, and new output from Zambia and DRC is seen as key to closing that gap. Copper accounts for around 70% of Zambia’s export earnings and contributed about 22% of net tax revenue in 2025. Mines Minister Paul Kabuswe said the government is actively courting more international investors, including from the US, in an attempt to regain lost ground from DRC, which has dominated African copper production since 2013. Whether these investments can be converted into mines and power fast enough to bend Zambia’s output curve upward, rather than delivering only the mild growth and Q1 2026 pullback seen so far, will determine if the 2031 target remains within reach.
Spot:
(1) Shanghai: On August 26, SMM #1 copper cathode spot prices against the SHFE copper 2609 contract were quoted at premiums of 240 yuan/mt–380 yuan/mt, with an average of 310 yuan/mt, up 60 yuan/mt from the previous trading day. The SHFE copper 2609 contract retreated after a rapid rise. After the opening bell, prices shot up quickly, reaching a peak near 108,550 yuan/mt intraday, then pulled back sharply. The price center subsequently consolidated lower and gradually moved below the average price line. Approaching the midday break, it dipped to near 108,050 yuan/mt, finally rebounding slightly to 108,120 yuan/mt. The backwardation spread between adjacent months was between 160 yuan/mt and 250 yuan/mt, and the import profit margin for spot SHFE copper against the 2609 contract with invoices dated this month ranged from a loss of 1,370 yuan/mt to a loss of 1,280 yuan/mt. During the day, sales sentiment for copper cathode in Shanghai was 2.97, up 0.03 MoM, and purchase sentiment was 3.44, up 0.19 MoM. Historical data can be found in the database. Looking ahead to today, available SX-EW copper cathode supply in the Shanghai market remained tight. After some lower-priced cargoes changed hands in early trading, offers in the market quickly dwindled, reinforcing suppliers' willingness to hold prices firm and hold back from selling. Approaching month-end, some downstream consumers and traders still needed to replenish cargoes with invoices dated this month, while supply of such cargoes was relatively limited, causing the invoice spread to gradually widen. The continued uptick in intraday purchase sentiment reflected persistent market restocking demand, providing strong support for spot premiums. However, with both copper prices and premiums at elevated levels, downstream acceptance of high-priced cargoes may gradually decline, potentially capping the willingness to chase prices. Overall, given the combination of tight available supply, month-end invoice replenishment demand, and firm supplier pricing, SHFE spot copper premiums against the 2609 contract are expected to remain today, with the overall center likely holding up well.
(2) Guangdong: On August 26, Guangdong #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 250 yuan/mt, unchanged from the previous trading day, standard-quality copper was quoted at a premium of 160 yuan/mt, up 10 yuan/mt from the previous trading day, and SX-EW copper was quoted at a premium of 100 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 109,205 yuan/mt, up 700 yuan/mt from the previous trading day, and the average price of SX-EW copper was 109,100 yuan/mt, up 705 yuan/mt from the previous trading day. The copper cathode purchase sentiment in Guangdong was 2.85, down 0.04 from the previous trading day, and shipment sentiment was 2.91, up 0.03 from the previous trading day (historical data can be accessed by logging into the database). Overall, with inventory continuing to decline, suppliers held prices firm for shipments, leading to generally moderate trading activity.
(3) Imported Copper: On August 26, the average warrant price fell $3/mt from the previous trading day to $85/mt (price range from $80/mt to $90/mt); the average B/L price dropped $5/mt from the previous trading day to $80/mt (price range from $75/mt to $85/mt); the average price of EQ copper (CIF B/L) was unchanged from the previous trading day at $38/mt (price range from $30/mt to $46/mt), with quotes referencing cargoes arriving from late August to mid-September.
(4) Secondary Copper: At 11:30 on August 26, the futures closing price was 109,440 yuan/mt, up 1,320 yuan/mt from the previous trading day. The average spot premium was 310 yuan/mt, up 60 yuan/mt MoM. Secondary copper raw material prices rose 300 yuan/mt MoM. The sales sentiment index for secondary copper raw materials rose to 2.84, while the purchasing sentiment index fell to 1.71. The price difference between copper cathode and copper scrap was 5,061 yuan/mt, up 1,041 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod stood at 1,880 yuan/mt. According to the SMM survey, copper prices shot up sharply driven by a short squeeze, even approaching 110,000 yuan/mt. Although the increase in secondary copper raw material prices was limited, amid such high prices, secondary copper rod enterprises saw very few transactions. The price deduction for imported secondary copper raw materials also remained unchanged. Scrap utilization enterprises indicated that scrap copper prices were artificially high, and they would resume purchasing after the short squeeze ends.
Prices: On the macro front, the US PCE price index for July rose 3.7% YoY, which firmed expectations of interest rate hikes and pushed the US dollar stronger, putting copper prices under pressure. On the geopolitical front, Iran stated it reached an agreement with Oman on revenue distribution in the Strait of Hormuz, but subsequent reports indicated that both sides had not yet finalised the deal, leaving the situation uncertain. On the fundamental front, the supply side was affected by port congestion, with arrivals and inflows of imported copper still slow, limiting spot replenishment. On the demand side, high copper prices suppressed downstream purchasing, with the market still dominated by essential needs. Overall, copper prices are expected to drift lower today.
[The information provided is for reference only. This article does not constitute direct investment, research, or decision-making advice. Clients should make decisions prudently and should not use this as a substitute for their own independent judgment. Any decisions made by clients are unrelated to SMM.]