[SMM USD Copper Market] Due to tight arrivals of spot USD copper at Chinese ports from July to August, suppliers have been holding prices firm with strong sentiment, and copper cathode CIF Shanghai premiums have been rising recently. However, current downstream acceptance is weak, and actual transactions are relatively limited.

[SMM Analysis] SHFE copper cathode spot premiums experienced notable volatility in H1 2026, marked by deep discounts in phases, a recovery in Q2, and a return to positive territory by mid-year. In Q1, seasonal inventory buildup after the Chinese New Year, slow downstream recovery, and disruptions from contract rollovers repeatedly put spot premiums under pressure. Entering Q2, consumption improved QoQ, and concentrated smelter maintenance drove continuous destocking of domestic social inventory. In particular, the rapid decline in Guangdong inventory lifted spot premiums in South China, opened arbitrage opportunities for shipping inventory from East China to South China, and provided support to premiums in Shanghai and other regions. From May to June, although high copper prices and off-season expectations suppressed downstream purchases, the widening LME-COMEX spread diverted overseas supply to the US market, constraining the pace of imported copper replenishment in China, with low inventory levels still underpinning spot market resilience. Looking ahead to H2, SHFE copper premiums will be shaped by the interplay of inventory, consumption, imports, and supply additions. The Q3 off-season may limit the upside for premiums, but low inventories, uncertainty over import replenishment, and tight regional supply will continue to support spot premiums. In Q4, attention should be focused on the capacity ramp-up of new expansion projects such as Humon Phase 2, Chifeng Jintong Phase 2, and Shenghai Phase 2. If new supply is released smoothly, the import window opens, and consumption recovery remains weak, spot premiums may gradually come under pressure. However, if inventories stay low and import replenishment remains limited, premiums could still see intermittent strengthening opportunities.

On July 3, the SMM Imported Copper Concentrate Index (weekly) came in at -$128.25/dmt, down $3.80/dmt from -$124.45/dmt in the previous period. The SMM Imported Copper Concentrate Index (monthly) for June was -$121.44/dmt, a decrease of $18.31/dmt from -$103.13/dmt in May. The payable indicator for 20% grade domestic copper ore was 97.5%-98.5%. This week, copper concentrate spot market trading activity improved from last week, with results from several mine tenders being released. In terms of spot transactions, a trader sold 20,000 mt of HVC and 10,000 mt of blended ore as a package to a smelter at an average of SMM and Fastmarket indices minus $15/mt, for shipment from August to September, QP: M+5. Another trader sold 10,000 mt of South American clean ore to a smelter at an average of SMM and Fastmarket indices minus $15/mt, for shipment in August, QP: M+5. Market rumors suggested that a trader sold 30,000-50,000 mt of imported copper concentrates to a smelter at a fixed number of -$127/dmt. On the mine tender front, results from a leading mine tender were released, with a transaction at -$196/dmt on the trader side. According to SMM, a smelter participated in this tender and was awarded, but the exact transaction price is currently unknown. The results of last week's Gibraltar tender were released, with market rumors of a transaction at -$180/dmt on the trader side, for shipment in H1 2027, with a volume of 30,000-60,000 mt. Additionally, a tender for a complex Peruvian blended ore was conducted, with a transaction price on the trader side of -$150/dmt, for 10,000 mt per year from 2026 to 2028, ore type Cobriza, QP: M+3. Overall, the downward trend in the copper concentrate spot market persisted, with mine tender and trader offer prices remaining deeply negative. However, as spot TC continued to breach historical extremes, Chinese smelters' resistance to current prices strengthened. Currently, smelters' psychological price level is largely around -$120/dmt, making it difficult for low-priced offers to be accepted in the spot market. The spot TC for imported copper concentrates has limited further downside room. On July 1, Chilean miner AMSA and some core Chinese copper smelters finalized the pricing scheme for the mid-year annual copper concentrate TC contract, abandoning the traditional fixed TC model for the first time in favor of a guaranteed floor index-linked pricing mechanism. It is reported that the persistently historically low spot TCs in the copper concentrate spot market created multiple disagreements during these mid-year term contract negotiations. Chinese smelters have historically used fixed TC pricing for mid-year term contracts, but AMSA insisted on switching to index-based pricing this time. Ultimately, the two parties reached an innovative compromise solution. On June 26, Anhui Youjin Guanhua New Material Technology Co., Ltd.'s 100,000 mt copper cathode smart electrolysis project officially commenced production and produced copper. According to SMM, the project is located in Guichi District, Chizhou City, Anhui province, with a total investment of about 835 million yuan. Currently, the company's monthly copper cathode production is about 10,000 mt. After the project is put into operation, it will bring a certain increment to regional copper cathode supply. SMM's copper concentrates inventory at eleven ports stood at 657,000 mt in physical content on July 3, up 40,800 mt in physical content from June 26. The main increases came from Fangchenggang Port and Qingdao Port, up 50,000 mt and 30,000 mt WoW respectively.

[SMM Flash] On June 26, the 100,000 mt copper cathode smart electrolysis project of Anhui Youjin Guanhua New Material Technology Co., Ltd. officially commenced production and yielded copper. According to SMM, the project is located in Guichi District, Chizhou city, Anhui province, with a total investment of approximately 835 million yuan. Currently, the company's monthly copper cathode production is about 10,000 mt, and once commissioned, the project will bring a certain increase to regional copper cathode supply.

Today, the most-traded BC copper contract 2606 opened at 92,120 yuan/mt, fluctuated downward in early trading to touch a low of 91,770 yuan/mt, then the copper price center gradually shifted upward. After the daytime session opened, copper prices continued to fluctuate upward, probing up to 93,380 yuan/mt near the end of the session, before fluctuating downward to finally close at 93,030 yuan/mt, up 0.31%. Open interest stood at 8,025 lots, down 555 lots from the previous trading day, with trading volume at 6,757 lots, indicating bears reducing positions. Macro perspective, divergences in related negotiations eased somewhat, but the Strait of Hormuz fee issue remained contentious, hindering negotiation progress. Wait-and-see sentiment was strong in the market, and copper prices overall maintained a sideways trading pattern. Fundamentals side, spot copper cathode supply was ample, with imported copper continuing to arrive at ports and enter warehouses. However, elevated copper prices suppressed downstream purchase willingness, with enterprises mostly restocking on an as-needed basis. Market trading was sluggish, and demand-side recovery remained weak. SHFE copper 2607 contract closed at 104,870 yuan/mt. Based on the BC copper 2606 contract at 93,030 yuan/mt, its after-tax price was 105,123 yuan/mt. The price spread between SHFE copper 2607 contract and BC copper was -253, with the inversion maintained and continuing to widen compared to the previous day.

[SMM North China Copper Cathode Spot Market] As copper prices continued to pull back, downstream restocking sentiment for copper cathode in North China received some boost. However, as the market entered the latter part of the month, increased supply from northern regions including North China, Shandong, and Northeast China put spot premiums in the market under pressure.