[SMM Import & Export Copper Market Flash] Recently, the import loss for Chinese copper cathode has continued to widen, and the export window for copper cathode has begun to open. As of press time, the import loss for the August contract is about 1,700 yuan/mt, and for the September contract, about 900 yuan/mt. According to SMM, the opening of the export window for copper cathode this round is mainly due to the significant backwardation structure of LME nearby contracts. Changes in Chinese and overseas market prices and term structures have created export arbitrage conditions for some copper cathode. Currently, the planned exports are about 20,000 mt. However, as the August contract approaches delivery, the exported copper cathode mainly flows into Chinese bonded zones. Going forward, as the Chinese and overseas market term structures are further adjusted, the copper cathode export window and goods flow still need continuous attention.

Looking ahead to tomorrow, with delivery approaching, the intermonth backwardation spread is expected to widen further. The cost of contract rollover for some suppliers will rise significantly, strengthening their willingness to sell spot copper and pushing quotes for standard-quality copper to quickly drop into discount territory. Meanwhile, amid relatively strong front-month contract prices, some deliverable material is inclined to be converted into warrants, resulting in divergent spot cargo flows. As of August 11, SHFE copper registered warrants stood at about 23,200 mt. As of the morning session close on August 12, open interest in the SHFE copper 2608 contract remained at about 23,000 lots. The pace of the pullback in open interest and changes in warrants ahead of delivery still warrants close attention. On the demand side, end-use consumption remained weak, with downstream procurement still largely need-based. Low-priced non-registered copper attracted active trading on the back of its price advantage, but this has yet to lead to a significant improvement in overall procurement. Overall, amid the widening backwardation spread, increased supplier willingness to sell, and weak end-use demand, quotes for Shanghai spot copper against the 2608 contract are expected to remain under pressure tomorrow, with spot copper likely staying at a discount.

[SMM Shanghai spot copper] Looking ahead to tomorrow, as delivery approaches and the inter-month backwardation spread widens further, the cost of rolling over positions for some suppliers has risen noticeably, boosting their willingness to sell spot cargoes, which has pushed mainstream standard-quality copper quotes quickly down to a discount range. Meanwhile, against the relatively strong front-month contract price, some deliverable material is being shifted to warrants, leading to a divergence in spot cargo flows. As of August 11, SHFE copper registered warrants stood at approximately 23,200 mt; as of the morning close on August 12, open interest in the SHFE copper 2608 contract remained around 23,000 lots. The pace of open interest pullback and warrant changes ahead of delivery still warrants close attention. On the demand side, end-use consumption remains sluggish, with downstream purchases still largely need-based, and low-priced non-registered copper trading relatively actively on price advantage but not yet driving a noticeable improvement in overall procurement. Taken together, with the widening backwardation spread, increased willingness to sell among suppliers, and weak end-use demand, spot copper prices against the SHFE 2608 contract are expected to remain under pressure tomorrow, and the spot is likely to stay at a discount.

On August 12, the average warrant price fell $3/mt from the previous trading day to $96/mt (price range: $89-103/mt); the average B/L price fell $5/mt to $90/mt (price range: $85-95/mt); the average price of EQ copper (CIF B/L) fell $1/mt to $62/mt (price range: $56-68/mt), with quotations referring to cargoes arriving from August to early September. The LME near-end backwardation structure continued to widen, the SHFE/LME price ratio was inverted, downstream purchasing interest remained subdued, and some domestic smelters exported small volumes to bonded warehouses. At the time, bids and offers diverged significantly, making actual transactions difficult, and psychological price expectations shifted lower. Mainstream quotations in the market were heard at $90-95/mt for August-arriving registered B/L, $100-105/mt for August registered warrants, and $65-70/mt for August-arriving EQ copper.

SMM Morning Meeting Summary: Overnight LME copper opened at $14,208/mt, touched a high of $14,218/mt in early fluctuations, then drifted lower all the way to $14,142/mt near the end of the session, and finally closed at $14,153/mt, up 0.23%. Trading volume was 15,700 lots, and open interest stood at 261,000 lots, an increase of 2,675 lots from the previous trading day, indicating an increase in bearish positions. Overnight, the most-traded SHFE copper 2609 contract opened at 108,200 yuan/mt, with the price center moving up to touch 108,320 yuan/mt in early trading, then drifting lower to a low of 107,900 yuan/mt, before closing at 108,000 yuan/mt, up 0.04%. Trading volume reached 21,000 lots, and open interest was 213,000 lots, a decrease of 1,714 lots from the previous trading day, indicating a decrease in bearish positions.

[SMM Shanghai spot copper] Looking ahead to tomorrow, as delivery approaches, the inter-month backwardation has further widened to above 300-400 yuan/mt. The cost of contract rollover rises accordingly for suppliers, and their willingness to sell spot copper increases, significantly capping premiums against the front-month contract. Today, sentiment in sales and procurement improved somewhat from yesterday, but as the SHFE copper price center rose above 108,000 yuan/mt, downstream users still mainly made just-in-time procurement, showing limited acceptance of high-priced offers. Meanwhile, some standard-quality copper has fallen to a discount of 10 yuan/mt to near parity, discounts for non-registered copper have widened further, and low-priced sources continue to weigh on mainstream standard-quality copper quotes. Overall, driven by the widening backwardation spread, increased willingness to sell among suppliers near delivery, and high copper prices suppressing consumption, the price center of Shanghai spot copper quotes against the 2608 contract is expected to continue to shift lower tomorrow, possibly showing a discount.

On August 11, the average warrant price fell $2/mt from the previous trading day to $99/mt (price range: $93-105/mt); the average B/L price fell $2/mt to $95/mt (price range: $90-100/mt); the average EQ copper (CIF B/L) price fell $2/mt to $63/mt (price range: $58-68/mt), with quotations referring to cargoes arriving from August to early September. Today, the LME nearby contract backwardation structure continued to widen, and the SHFE/LME price ratio weakened. Downstream purchase willingness was low, while upstream offers did not drop significantly, leaving actual market transactions sluggish. It was heard that in the market today, mainstream quotations for registered B/L arriving in August were $95-100/mt, mainstream quotations for registered warrants in August were $105/mt, mainstream quotations for EQ copper arriving in August were $65/mt, and mainstream quotations for EQ copper arriving in September were $70-80/mt.

SMM Morning Meeting Minutes: Overnight, LME copper opened at $14,122.5/mt, drifted lower in early trading to touch a low of $14,069/mt, then the price center gradually moved up to test $14,177/mt, and subsequently drifted lower again to close at $14,120/mt, up 0.7%, with trading volume of 15,000 lots and open interest of 259,000 lots, an increase of 1,164 lots from the previous session, represented by bulls adding positions. Overnight, the most-traded SHFE copper 2609 contract opened at 107,850 yuan/mt, drifted lower in early trading to test 107,450 yuan/mt, then the price center moved up sharply to touch 108,060 yuan/mt, and finally closed at 107,790 yuan/mt, up 0.16%, with trading volume of 27,400 lots and open interest of 212,000 lots, a decrease of 2,287 lots from the previous session, represented by bears reducing positions.

[SMM Shanghai Spot Copper] Tomorrow, due to the impact of typhoon weather, cargo pick-up and transportation at some warehouses in east China will be restricted, and short-term cargo circulation efficiency will decline, providing some support to the spot market. However, trading was sluggish during the day. Affected by weather factors and high copper prices, downstream purchase willingness declined significantly, and purchases were mostly based on rigid demand. Some processing enterprises in Zhejiang reduced their cargo pick-up arrangements to Shanghai due to traffic restrictions, providing limited support from the demand side. On the inventory front, SMM recorded Shanghai social inventory at 78,300 mt, up 2,200 mt WoW from last Thursday; Jiangsu social inventory at 18,100 mt, down 2,400 mt WoW from last Thursday. Overall inventory changes in east China were limited, without reflecting significant supply pressure. Meanwhile, the backwardation spread between contracts widened to 240-310 yuan/mt. The spread between spot and futures widened, and some suppliers' need to roll positions and convert to cash increased, which may exert some pressure on spot premiums. Overall, with the combined effects of typhoon weather disrupting cargo circulation, the widening backwardation structure, and sluggish trading, it is expected that Shanghai spot copper against the 2608 contract will still maintain premiums tomorrow, but the overall center may fluctuate slightly. Attention should be paid to cargo pick-up and supply circulation at warehouses after the weather improves.

SMM Morning Meeting Minutes: Last Friday night, LME copper opened at $14,141/mt. At the beginning of the session, it swung wildly and hit a high of $14,173/mt. Then the center of copper prices shifted straight downward, dipping to $14,006/mt near the end of the session, and finally settled at $14,022/mt, down 0.5%. Trading volume reached 19,800 lots, and open interest stood at 258,000 lots, up 3,254 lots from the previous trading day, indicating an increase by bears. Last Friday night, the most-traded SHFE copper 2609 contract opened at 108,010 yuan/mt. It immediately rose to 108,140 yuan/mt at the beginning, then the center of copper prices consolidated lower, dipping to 107,130 yuan/mt near the end, and finally settled at 107,160 yuan/mt, down 0.8%. Trading volume reached 45,000 lots, and open interest stood at 215,000 lots, down 6,056 lots from the previous trading day, indicating a reduction by bulls.