SMM Morning Meeting Summary: Last Friday night, LME copper opened at $12,871/mt. It hit a high of $12,942/mt amid wide swings early in the session, after which the center of copper prices gradually moved lower and fell to $12,733/mt near the close, finally settling at $12,735.5/mt, down 1.64%. Trading volume reached 22,600 lots, and open interest stood at 307,000 lots, an increase of 3,144 lots from the previous trading day, mainly due to bears adding positions. Last Friday night, the most-traded SHFE copper 2604 contract opened at 100,520 yuan/mt and climbed to 100,760 yuan/mt early in the session. Afterwards, the center of copper prices fluctuated downward and touched a low of 99,710 yuan/mt near the close, with a decline of 0.86%. Trading volume reached 38,900 lots, and open interest stood at 190,000 lots, a decrease of 930 lots from the previous trading day, mainly due to bulls reducing positions.

SMM Morning Meeting Minutes: On Friday night last week, LME copper opened at $12,871.5/mt. After fluctuating rangebound in early trading, it dipped to $12,805.5/mt, then the center rose to a high of $12,927.5/mt, and finally closed at $12,869/mt, up 0.08%. Trading volume fell by 3,517 lots from the previous trading day to 24,000 lots; open interest increased by 2,377 lots from the previous trading day to 308,000 lots, mainly reflecting bulls adding positions overall. On Friday night last week, the most-traded SHFE copper 2604 contract opened at 100,250 yuan/mt. It bottomed at 100,180 yuan/mt in early trading, then the center rose to a high of 100,820 yuan/mt, and finally closed at 100,250 yuan/mt while fluctuating rangebound, down 0.53%. Trading volume fell by 58,000 lots from the previous trading day to 69,000 lots; open interest increased by 1,229 lots from the previous trading day to 197,000 lots, mainly reflecting bears adding positions overall.

SMM Analysis: In 2025, China's smelting and refining capacity grew, while the TC for copper concentrates continued to deteriorate. Against this backdrop, smelters were compelled to adjust their raw material mix, with copper scrap, blister copper, and anode plates becoming key substitutes and supplements...

SMM Morning Meeting Minutes: On Friday, LME copper opened at $13,230/mt, hitting an intraday high of $13,481.5/mt in early trading, after which copper prices fluctuated downward, touching a low of $12,845/mt near the close, and finally settled at $13,070.5/mt, down 4.63%. Trading volume reached 29,000 lots, an increase of 2,143 lots from the previous trading day; open interest stood at 330,000 lots, a decrease of 1,761 lots from the previous trading day, with the overall performance mainly reflecting long liquidation. On Friday evening, the most-traded SHFE copper 2603 contract opened at 104,200 yuan/mt, fluctuated rangebound in early trading before reaching a high of 105,080 yuan/mt, then fluctuated downward, touching a low of 102,700 yuan/mt near the close, and finally settled at 103,190 yuan/mt, down 4.75%. Trading volume reached 183,000 lots, a decrease of 603,000 lots from the previous trading day; open interest stood at 219,000 lots, a decrease of 4,081 lots from the previous trading day, with the overall performance mainly reflecting long liquidation.

In May, the copper market operated steadily, with SHFE copper prices fluctuating rangebound around 78,000 yuan/mt. The trends of LME copper and SHFE copper were generally similar, but LME copper outperformed SHFE copper, boosted by factors such as declining inventories and a weaker US dollar. The market focused on overseas macroeconomic data. In early May, the UK and the US reached an agreement on the terms of a tariff and trade deal, raising market expectations for an improvement in the global trade environment and leading to a slight rebound in the US dollar index. On May 12, the Ministry of Commerce issued a joint statement on the Sino-US Geneva Economic and Trade Talks, announcing that significant consensus had been reached in Sino-US trade negotiations. This progress significantly boosted market risk appetite, and copper prices strengthened temporarily as a result. In addition, the US Fed maintained its pause in interest rate cuts at its May policy meeting. Fed Chairman Powell stated that high tariffs could push up inflation and exacerbate pressure on the job market, and that the current monetary policy was in a moderately restrictive range, with a manageable outlook for underlying inflation, making it prudent to maintain a wait-and-see approach. Two days after the Fed announced its latest interest rate decision, several Fed officials reiterated the importance of controlling inflation expectations, believing that uncertainties in trade policy could lead to interest rates remaining elevated for a longer period. In mid-to-late June, the Fed's policy meeting will be held. According to the CME "FedWatch Tool," the probability of the Fed maintaining interest rates unchanged in June is 95.3%, with a 4.7% probability of a 25-basis-point cut. The probability of the Fed maintaining interest rates unchanged in July is 75.6%, with a 23.4% probability of a cumulative 25-basis-point cut and a 1.0% probability of a cumulative 50-basis-point cut. The impact of the US tariff policy on the market is gradually stabilizing, but the inflation concerns it has triggered and its potential impact on the economy will gradually emerge. Against this backdrop, the financial attributes of copper will continue to weaken. The shortage of raw materials intensified. In the week ending May 30, the processing fee for imported copper concentrates was reported at -$43.56/mt, further declining from -$42.61/mt at the end of April. Since turning negative on January 24 this year, the processing fee for imported copper concentrates has continued to fluctuate downward, reflecting persistent pressure on ore supply. In terms of copper scrap, the volume of copper scrap imported from the US has continued to decline since the beginning of this year. Although imports of copper scrap from Japan have increased somewhat, this has been insufficient to offset the decline in imports from the US. As copper prices struggle to rise and fail to stimulate the market to release more supply, it is expected that the volume of imported copper scrap will be difficult to rebound in June. Coupled with the resumption of production by some smelters after maintenance, the tight supply of copper scrap is expected to further intensify in June. According to SMM data, the operating rates of domestic copper smelters in China have generally shown an upward trend this year. However, around the delivery periods between months, a significant increase in market deliveries has led to a short-term accumulation of copper inventories at the SHFE. Due to limited inflows of imported supplies, the supply of copper cathode remains tight. Regarding domestic smelters, four smelters are scheduled for maintenance in June, involving the same crude and refined smelting capacity as in May. It is expected to affect production by 22,300 mt, a significant decrease compared to the impact of previous maintenance. Although the scale of planned maintenance at domestic smelters in Q2 gradually narrows in June, the pressure on raw material supply increases instead of decreasing, and the tight supply of copper cathode will persist in June. According to SMM data, the forecasted operating rate of domestic wire and cable enterprises in May was 84.66%, continuing to rebound from the April level. Demand side, power consumption has maintained a positive trend this year, with overall stable demand from the real estate sector. Notably, since the start of Q2, both newly started and completed construction areas in real estate have rebounded. However, wire and cable enterprises engaged in concentrated procurement of raw materials when copper prices fell in April, and now the inventory of copper rod raw materials has once again accumulated to a high level. Therefore, despite the rebound in demand from the wire and cable sector, the transmission of demand still lags behind. The production and sales of the air conditioning industry exhibit distinct seasonal characteristics. In June, enterprises have entered a downward production cycle, with production and sales activities set to contract further, and their boosting effect on copper demand will also weaken accordingly. The automotive industry is in a phase of seasonal rebound, with NEV production continuing to accelerate. Coupled with positive sales performance this year, the industry's copper demand will steadily rebound. In summary, copper prices will continue to fluctuate at highs in June. (Source: Futures Daily)

Impact of US Tariff Policies Gradually Emerges As downstream consumption gradually recovers, the operating rates of copper downstream processing enterprises have significantly increased. However, the impact of US tariff policies is gradually emerging, making it difficult to be optimistic about the subsequent copper consumption. Since April, the most-traded SHFE copper contract has formed a trend of first declining and then rising, with prices gradually rebounding after hitting a low of 71,000 yuan/mt. Meanwhile, arbitrage trading in the LME and COMEX copper markets has weakened, while domestic copper smelter maintenance has increased, and social inventory of copper has rapidly decreased, providing support for copper prices. How much room is there for copper prices to rebound subsequently? Supply Side Remains Tight In December 2024, China's copper concentrate production was 151,800 mt, up 6.89% YoY and 9.51% MoM. In March 2025, China imported 2.3939 million mt of copper concentrates and ore in physical terms, up 9.69% MoM and 2.73% YoY. This year, China's copper concentrate production has been at a relatively low level, while imports have remained relatively stable, resulting in a decrease in the overall supply of copper concentrates. In late April, Peru's Antamina mine fully suspended operations due to a sudden accident. In 2024, the mine's copper production was 426,900 mt, accounting for 1.86% of the global total copper mine production, which will have a certain impact on the global copper ore supply. In terms of inventory, as of April 18, the copper concentrate inventory at domestic mainstream ports was 706,900 mt, at a medium level. Meanwhile, the processing fee for imported ore continued to decline, falling to -$34.71/mt, hitting a record low. In addition, according to data from relevant institutions, the global new copper concentrate capacity additions accelerated from 2021 to 2025. However, in the three years after 2026, the growth rate of global new copper concentrate capacity will rapidly decline, potentially exacerbating the tight supply of global copper concentrates in the later period. As of February this year, China's copper scrap production was 115,800 mt in metal content, up 4.99% MoM and 60.83% YoY. According to March data, China's imports of copper scrap and shredded copper scrap were 189,700 mt in physical terms, down 3,631 mt (-1.88%) MoM and 13.07% YoY. Among them, imports from the US were 22,500 mt in physical terms, down 8,900 mt MoM. With the intensifying impact of Sino-US trade frictions, the volume of imported copper scrap may decline in the later period, leading to a tight supply-demand structure for copper scrap. In February, China's blister copper production was 911,500 mt, down 2.96% MoM and up 10.74% YoY. Among them, mineral-derived blister copper decreased by 26,500 mt from January to 738,700 mt, while scrap-derived blister copper decreased by 1,300 mt to 172,800 mt. In March, China imported 50,200 mt of copper anode, down 11.05% MoM and 47.8% YoY. In March, China's copper cathode production reached 1.1221 million mt, up 6.04% MoM and 12.27% YoY. Entering April, the supply of copper concentrates tightened, prompting some smelters to reduce their feedstock intake of copper concentrates. However, by increasing the intake of copper scrap and anode plates, they managed to maintain stable copper cathode production. Additionally, a new smelter in east China commenced operations, and the capacity utilization rate of smelters in southwest China increased, leading to a slight decline in the total copper cathode production. Due to significant losses in the industry, the operating rate of domestic smelters remained relatively low, while import losses also suppressed the supply of imported copper. Overall, despite the increase in copper cathode production, the overall supply pressure remained relatively small. Looking ahead at capacity increments, it is expected that China will add 1.17 million mt of new copper refining capacity in 2025, with overseas capacity additions reaching around 870,000 mt. Among these, the Kamoa mining area, jointly held by Ivanhoe and Zijin Mining, will contribute the largest increase in overseas capacity. Rebound in downstream operating rates In 2025, China's fiscal policy will become more proactive. Specifically, the scale of ultra-long special treasury bonds is expected to increase from 1 trillion yuan to 2 trillion yuan, while the scale of new special local government bonds is expected to rise from 3.9 trillion yuan to 4.5 trillion-5 trillion yuan. With the continuous strengthening of fiscal policy, it is anticipated that infrastructure investment in 2025 will continue to fluctuate at highs in recent years, with investment growth expected to stabilize at 5%-10%. Infrastructure investment will remain one of the main driving forces for industrial product demand in 2025. In December 2024, China's copper semis production reached 2.27 million mt, up 6.2% MoM and 16.53% YoY. The operating rate of China's copper semis industry in December 2024 was 69.02%. Affected by the Chinese New Year holiday, the operating rate of the copper semis industry was relatively low in January-February 2025 but gradually recovered to 67% in March. With the recovery of downstream consumption, the operating rates of downstream copper processing enterprises continued to rebound. Entering April, copper prices fell sharply, stimulating an increase in downstream orders. It is expected that the operating rate of the copper semis industry may continue to rise, but attention should be paid to the impact of US tariff policies on China's copper consumption. Additionally, the YoY data for overall power grid and NEV production both showed slight increases, providing further bullish support for copper cathode demand. Bulls take the initiative in forward contracts In April, the growth rate of COMEX copper inventories accelerated, approaching 130,000 short tons as of April 23. Domestically, as of April 24, China's social copper inventory stood at 181,700 mt, achieving eight consecutive weeks of weekly destocking. It fell by 195,300 mt from the year's high and was 223,000 mt lower than the 404,700 mt recorded in the same period last year. In April, the decline in LME copper inventories slowed, hovering around 210,000 mt, while the ratio of cancelled warrants dropped from a high of 50% to 37%. As of April 18, both non-commercial long and short positions of COMEX No. 1 copper decreased compared to the previous week, with net long positions dropping by 4,764 lots to 19,477 lots. Meanwhile, LME copper investment fund long and short positions both increased, with net long positions rising by 1,479 lots to 29,842 lots. The domestic futures market exhibited a contango structure, with long positions in far-month contracts dominating, indicating bullish sentiment among major funds regarding future prices. From the supply-demand balance table, as the peak consumption season approaches, downstream demand is rebounding while upstream supply is pulling back, leading to a gradual improvement in the supply-demand structure. The probability of a supply-demand gap in Q2 is increasing. Against this backdrop, market optimism is rising, providing some bullish support for prices. From a macro perspective, the US economic data for March, including ISM Manufacturing PMI, CPI, and PPI, showed steady performance. The impact of US tariff policies is expected to be reflected in April's data, and subsequent attention should be paid to the progress of negotiations between the US and other countries. On the supply side, the tight supply of copper raw materials has intensified, with import concentrate TC continuing to decline, and tariff policies affecting copper scrap imports. However, the current production cuts in copper smelting are relatively small, with April mainly focused on maintenance. By-products such as sulphuric acid and gold can partially offset smelter losses. On the consumption side, as downstream consumption gradually recovers, the operating rate of downstream processing enterprises has significantly increased. The shortage of secondary copper raw materials has also stimulated market consumption of copper cathode. However, the impact of US tariff policies is gradually becoming apparent, making it difficult to be optimistic about future copper consumption. Overall, the fundamentals of copper provide moderate support, but US tariff policies continue to trouble the market, limiting the rebound potential of copper prices. It is expected that SHFE copper prices may struggle to break new highs in May, with caution advised against the risk of jumping initially and then pulling back. (Source: Futures Daily)