SMM Copper Morning Briefing | Friday, October 16, 2026

Overnight, both LME copper and SHFE copper closed lower, driven by increased short positions in LME copper and reduced long positions in SHFE copper. US economic data came in stronger than expected, with rising inflationary pressures compounded by a hawkish tone from the US Fed, geopolitical disruptions from the US-Iran situation, and easing mine strike risks, all of which weighed on copper prices. Copper prices are expected to consolidate with a slight upward bias today.

1. Overnight Futures

LME Copper:

Opened at $14,317.5/mt, hit a high of $14,382/mt, a low of $14,256/mt, and closed at $14,309/mt, down 0.88%. Trading volume was 30,800 lots, with open interest at 270,200 lots, up 5,126 lots from the previous trading day, reflecting increased short positions.

Most-traded SHFE Copper 2611 Contract:

Opened at 108,850 yuan/mt, hit a high of 109,190 yuan/mt, a low of 108,600 yuan/mt, and closed at 108,970 yuan/mt, down 0.71%. Trading volume was 37,500 lots, with open interest at 185,000 lots, down 3,508 lots from the previous trading day, reflecting reduced long positions.

2. News

On Wednesday, October 14, the union announced that BHP and the supervisors' union at its Escondida copper mine in Chile reached an agreement on improved benefits, averting a strike at the world's largest copper mine.

The shutdown risk previously faced by Escondida had supported copper prices, and combined with low LME copper inventories, it heightened market concerns over copper supply.

The union said in a statement that 64% of union members voted to accept the company's proposal, while 35% voted against it. The union stated that the proposal was approved, concluding the statutory collective bargaining process for 2026.

BHP said the new contract is valid for 36 months and includes increases in fixed pay, variable pay, and existing benefits, along with new bonuses and other benefits. The union previously stated that the preliminary agreement reached by both parties was superior to the company's October 12 proposal in terms of benefits and final settlement terms.

BHP's earlier proposal included a combination of final payments and low-interest loans, with each worker receiving approximately $30,000. Negotiations began earlier on Tuesday in a last-minute effort to avert a strike. A strike could have disrupted supply from this mine, which plays a central role in the global copper market.

3. Spot Market

1) Shanghai

Purchasing sentiment was 2.81, up 0.04 WoW; sales sentiment was 2.91, down 0.16 WoW.

On October 15, SMM #1 copper cathode spot prices against the SHFE copper 2610 contract were quoted at a discount of 30 yuan/mt to a premium of 200 yuan/mt, with an average premium of 85 yuan/mt, up 135 yuan/mt from the previous trading day.

In early trading, the SHFE copper 2610 contract mostly traded between 110,180 and 110,600 yuan/mt, while the SHFE copper 2611 contract mostly traded between 109,610 and 110,010 yuan/mt.

The backwardation spread between the two front-month contracts stood at 520-620 yuan/mt. The import profit margin for SHFE copper against the 2610 contract was at a loss of 790-680 yuan/mt.

As delivery approached, some suppliers opted to register deliverable cargoes as warrants to participate in delivery. SHFE registered warrants increased by more than 10,000 mt. After delivery, attention should be paid to the outflow of unmatched warrants.

Demand side, after SHFE copper prices pulled back during the night session, downstream purchases improved slightly from earlier, but overall volumes remained subdued, with the market still dominated by rigid demand. During the day, suppliers continuously lowered their quotes against the 2611 contract to facilitate transactions. However, low-priced cargoes were snapped up quickly, and the availability of low-priced cargoes in the market was relatively limited, providing some support to premiums.

With the 2610 contract completing delivery, spot price benchmarks have shifted to the 2611 contract starting today. Spot premiums in Shanghai are expected to remain at relatively high levels, likely consolidating around the current trading center against the 2611 contract in the near term. Going forward, attention should be paid to the release of delivered cargoes, arrivals of imported copper, and the actual restocking intensity of downstream buyers after the pullback in copper prices.

2) Guangdong

Purchasing sentiment was 2.38, down 0.03 from the previous trading day. Selling sentiment was 2.59, down 0.04 from the previous trading day.

On October 15, Guangdong #1 copper cathode spot against the front-month contract:

• High-quality copper was quoted at a premium of 150 yuan/mt, down 100 yuan/mt from the previous trading day.
• Standard-quality copper was quoted at a discount of 100 yuan/mt, down 50 yuan/mt from the previous trading day.
• SX-EW copper was quoted at a discount of 160 yuan/mt, down 50 yuan/mt from the previous trading day.

The average price of Guangdong #1 copper cathode was 110,300 yuan/mt, down 1,275 yuan/mt from the previous trading day. The average price of SX-EW copper was 110,265 yuan/mt, down 1,100 yuan/mt from the previous trading day.

Overall, on the delivery day, both buyers and sellers showed weak trading interest, with only sporadic purchases, and spot premiums continued to decline.

3) Imported copper

October 15:

• The average warrant price was $136/mt, flat from the previous trading day, with a price range of $122-150/mt.
• The average B/L price was 129 yuan/mt, flat from the previous trading day, with a price range of 120-138 yuan/mt.
• The average price of EQ copper (CIF B/L) was $64/mt, up $4/mt from the previous trading day, with a price range of $60-68/mt.

Quotes are based on cargoes arriving from October to early November.

4) Secondary copper

On October 15 at 11:30, copper futures closed at 109,610 yuan/mt, down 2,140 yuan/mt from the previous trading day; spot premiums averaged 85 yuan/mt, up 135 yuan/mt from the previous trading day.

Copper scrap prices fell 500 yuan/mt WoW; the sales sentiment index dropped to 2.54, and the purchasing sentiment index dropped to 2.02; the price difference between copper cathode and copper scrap was 2,794 yuan/mt, down 910 yuan/mt WoW; the price difference between copper cathode rod and secondary copper rod was 0 yuan/mt.

According to the SMM survey, expectations for US Fed interest rate hikes intensified, and global metal prices pulled back sharply. During the day, both secondary copper rod enterprises and copper scrap traders saw their buying and selling sentiment indexes pull back.

Affected by wild price swings, transactions in the copper scrap market were hard to conclude, with both upstream and downstream players waiting for copper prices to stabilize before resuming quotations and trading activities.

IV. Inventory (October 15)

Social inventory in Shanghai stood at 70,200 mt, up 3,700 mt WoW; social inventory in Jiangsu stood at 22,000 mt, up 2,200 mt WoW.

As of Thursday, October 15, SMM copper inventories across major regions in China rose 12,100 mt WoW from the previous Thursday to around 110,000 mt, with total inventory down more than 60,000 mt from above 170,000 mt in the same period last year.

V. Price Outlook

Macro:

US September PPI rose 6.3% YoY and 1.3% MoM, both well above expectations; retail sales rose 0.8% MoM, also above expectations, intensifying inflationary pressure. US Fed's Hammack said worsening inflation expectations may force the US Fed to take more aggressive action.

According to US media reports, the US has drawn up new strike plans against Iran, potentially using the "Mother of All Bombs" for the first time to strike Iranian energy and nuclear facilities. Stronger-than-expected US inflation data, combined with easing strike events, pushed copper prices lower under pressure.

Fundamentals:

Supply side, warrant registrations increased before delivery, and unmatched warrants are expected to flow out after delivery, but low-priced available cargoes in the market remain relatively limited. Demand side, downstream purchases improved slightly after copper prices pulled back, but overall volume growth was not significant, with transactions still dominated by rigid demand, indicating weak demand performance.

Overall, copper prices are expected to hold up well and drift higher in a narrow range today.

The information provided is for reference only and does not constitute direct investment research advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are not related to SMM.