SMM Copper Morning Briefing | Tuesday, October 20, 2026

Overnight, LME copper edged higher on short covering, while SHFE copper closed lower on long liquidation. LME copper inventories rebounded, and the end of an overseas copper mine strike eased supply concerns. Combined with a stronger US dollar amid European turmoil, copper prices are expected to consolidate on a subdued note in a narrow range today.

1. Overnight Futures

LME copper:

Opened at $14,391/mt, hit a high of $14,412/mt, a low of $14,270/mt, and closed at $14,372.5/mt, up 0.09%. Trading volume was 17,000 lots, and open interest stood at 268,000 lots, down 1,065 lots from the previous trading day, reflecting short covering.

Most-traded SHFE copper 2611 contract:

Opened at 109,010 yuan/mt, hit a high of 109,560 yuan/mt, a low of 108,860 yuan/mt, and closed at 109,560 yuan/mt, down 0.26%. Trading volume was 29,000 lots, and open interest stood at 168,000 lots, down 30 lots from the previous trading day, reflecting long liquidation.

2. News

Diversified miner South32 reported on Monday that its copper production rose 2% in Q1 of fiscal 2027, mainly driven by planned mining of higher-grade ore, though output came in slightly below market expectations.

Excluding the aluminum portfolio, the copper business contributed more than half of South32's earnings in fiscal 2026, making it the miner's primary cash generator. Supply constraints and demand growth from AI and renewable energy infrastructure drove copper prices to record highs this year, enhancing copper's investment appeal.

In the quarter ended September 30, South32's attributable copper production from its interest in the Sierra Gorda project in Chile was 18,700 mt, up from 18,300 mt in the prior-year period but below Visible Alpha's estimate of 19,200 mt.

3. Spot Market

1) Shanghai

Procurement sentiment was 3.03, up 0.02 MoM; sales sentiment was 3.11, down 0.01 MoM.

On October 19, SMM #1 copper cathode spot prices against the SHFE copper 2611 contract were quoted at a premium of 620–800 yuan/mt, with an average premium of 710 yuan/mt, down 115 yuan/mt from the previous trading day.

In early trading, the SHFE copper 2611 contract opened higher with a gap and then drifted higher. After the open, prices quickly rose to around 109,900 yuan/mt, then consolidated repeatedly in the 109,800–109,950 yuan/mt range. Mid-session, copper prices rallied again, peaking near 110,140 yuan/mt before retreating after the rapid rise, pulling back to around 109,900 yuan/mt near midday and closing the morning session at 109,900 yuan/mt.

The Back month spread between futures contracts was 680–700 yuan/mt; the import profit margin for SHFE copper against the 2611 contract for the current month was at a loss of 570–500 yuan/mt.

During the day, suppliers continuously lowered quotes to facilitate transactions, but no large-scale inflow of previously delivered warrants into the spot market has been seen yet, and available supply in Shanghai remains relatively limited.

Some delivered cargoes are expected to be gradually released from this afternoon to tomorrow. If warrants are canceled and flow into the spot market, the supply tightness may ease somewhat, putting some pressure on spot premiums. Meanwhile, some suppliers have limited willingness to sell at low prices, and sentiment to hold prices firm and hold back from selling persists, providing some support to spot premiums.

Demand side, downstream processing enterprises overall still mainly make just-in-time procurement, with limited acceptance of high copper prices and high premiums, and weak willingness to chase higher prices.

Overall, Shanghai spot premiums are expected to continue to consolidate at highs tomorrow. If the outflow of delivered warrants increases, the premium center may edge lower. Going forward, close attention should be paid to the pace of warrant outflows, changes in inter-month backwardation, and actual downstream procurement performance.

2) Guangdong

Procurement sentiment was 2.45, down 0.03 from the previous trading day; selling sentiment was 2.71, up 0.02 from the previous trading day.

On October 19, Guangdong #1 copper cathode spot prices against the front-month contract:

• High-quality copper was quoted at a premium of 660 yuan/mt, down 170 yuan/mt from the previous trading day;
• Standard-quality copper was quoted at a premium of 410 yuan/mt, down 120 yuan/mt from the previous trading day;
• SX-EW copper was quoted at a premium of 350 yuan/mt, down 120 yuan/mt from the previous trading day.

The average price of Guangdong #1 copper cathode was 110,430 yuan/mt, up 190 yuan/mt from the previous trading day; the average price of SX-EW copper was 110,245 yuan/mt, up 215 yuan/mt from the previous trading day.

Overall, as premiums declined, downstream procurement volume increased slightly, but overall trading remained weak.

3) Imported copper

October 19:

• The average warrant price was $137/mt, flat from the previous trading day, with a price range of $124-150/mt;
• The average B/L price was 130 yuan/mt, flat from the previous trading day, with a price range of 122-138 yuan/mt;
• The average price of EQ copper (CIF B/L) was $62/mt, down $2/mt from the previous trading day, with a price range of $58-66/mt.

Quotes referenced cargoes arriving from October to early November.

4) Secondary copper

At 11:30 on October 19, the futures closing price was 109,900 yuan/mt, down 270 yuan/mt from the previous trading day; the average spot premium was 710 yuan/mt, down 115 yuan/mt MoM from the previous trading day.

Secondary copper raw material prices remained flat MoM; the selling sentiment index rose to 2.55, and the procurement sentiment index rose to 2.04; the price difference between copper cathode and copper scrap was 3,139 yuan/mt, down 385 yuan/mt MoM; the price difference between copper cathode rod and secondary copper rod was 610 yuan/mt.

According to an SMM survey, copper prices stabilized, and secondary copper rod enterprises continued to make just-in-time procurement. In the afternoon, the price center of futures shifted lower, and many copper scrap traders priced the scrap previously stored at scrap utilization enterprises.

The volume of copper scrap accepted for pricing by scrap utilization enterprises exceeded their procurement plan, so they suspended pricing for traders. Intraday copper scrap transactions were dominated by traders.

IV. Inventories (October 19)

As of Monday, October 19, SMM copper inventories in major Chinese regions fell 900 mt WoW from the previous Monday to above 100,000 mt, with total inventories down more than 70,000 mt from above 180,000 mt in the same period last year.

V. Price Outlook

Macro:

LME copper inventories increased, hitting a two-month high; meanwhile, the end of the strike at Antofagasta's Centinela copper mine in Chile helped ease market concerns over tight supply. At the same time, violent protests in France dragged the euro lower, and the US dollar index stabilized and closed higher.

Fundamentals:

Supply side, arrivals of imported copper edged up, while arrivals of domestic copper pulled back. Demand side, downstream wait-and-see sentiment was strong, and overall consumption was weak.

Overall, copper prices are expected to consolidate on a subdued note 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.