High copper prices, ample supply, weak demand, inventory buildup, weak structure ↓ Falling copper prices, still ample supply, good demand, destocking, slightly stronger structure ↓ Fluctuating copper prices, relatively tight supply, demand fluctuating with copper prices, high probability of destocking, high probability of strengthening structure Q1 2026 has ended, and April trading days are also about to end. The above two sentences summarize SHFE copper futures and spot market performance. Note that this refers only to copper cathode supply, as China saw significant production increases in 2025. Despite continued ore tightness, production in 2026 has also remained fluctuating at highs, keeping copper cathode supply persistently ample. Demand side, although annual demand showed growth, when broken down to monthly or even daily levels, demand was significantly influenced by copper prices. Amid copper price fluctuations, secondary copper was the "active player" — when copper prices were high, secondary copper shipments increased, benefiting both supply and demand sides; when copper prices fell, secondary copper shipments decreased, reducing some raw material supply for both supply and demand. So recently the spot market appeared to have tight supply. Smelters began shifting to "high prices with high volumes" in shipments. Against the backdrop of continued destocking and concentrated smelter maintenance, can premiums "heat up"? The chart above shows that from a macro perspective, copper prices and Shanghai spot copper premiums exhibited a clear inverse correlation in recent years. However, from a detailed perspective, Shanghai spot copper premiums have recently shown signs of "picking up" under high copper prices. 1. Although inventory continued destocking, the current warrant-to-inventory ratio remained elevated (this indicator is highly correlated with structure). The SHFE copper near-month structure has not shown a sustained backwardation structure to provide guidance for future premiums. 2. Although copper prices returned to highs, overall secondary copper shipment sentiment remained subdued, providing limited supplementation to copper cathode production and consumption. Previously, the price difference between primary metal and scrap was inverted, which favored copper cathode consumption. During this process, non-registered supply supplementation was limited, and the price spread between non-registered and SX-EW copper also narrowed. Imported copper supplementation within the year decreased YoY compared to previous years. Taking DRC as an example, non-registered supply was also diverted. Overall, substitutes for registered copper cathode decreased. 3. Copper cathode supply itself is about to decrease in the coming months, with concentrated maintenance currently underway in the market. Social inventory is expected to further decline. As inventory decreases and the warrant-to-inventory ratio declines, the far-month structure has already shifted to backwardation. China's spot premiums are also expected to pick up in the near term. It has been observed that Guangdong spot premiums have been consistently higher than other regions nationwide for several consecutive days. Downstream buyers in Jiangsu, Zhejiang, Shanghai, and Anhui have recently tended to purchase from direct producers and traders with inventory who can issue invoices for the current month. Shanghai spot copper premiums are expected to see a small spike before the Labour Day holiday. After the holiday, as domestic supply decreases, premiums are expected to gradually firm up. However, the warrant-to-inventory ratio remains relatively high, and a sustained shift to backwardation in the structure still requires patience.

The most-traded BC copper contract 2606 opened at 89,560 yuan/mt today. It maintained wild swings in early trading, then the copper price center gradually shifted upward to 89,990 yuan/mt after the daytime session opened, before fluctuating downward to a low of 89,150 yuan/mt, and finally closed at 89,460 yuan/mt, down 0.26%. Open interest stood at 9,089 lots, an increase of 166 lots from the previous trading day, with trading volume at 5,934 lots, indicating bears adding positions. The US Fed kept the current interest rate unchanged, with notable internal policy stance divergence. Powell will remain as a governor after stepping down as Fed Chairman, and Warsh's nomination has passed the Senate committee review. Trump stated that conditions were currently suitable for an interest rate cut, while making clear that sanctions on Iran would not be lifted until the Iranian nuclear issue is resolved. The US and Iran are currently maintaining phone communications. Iran released a tough signal, warning that if the US continued to seize vessels, it might take unprecedented military countermeasures, with related retaliation plans still advancing. Combined with rising international crude oil prices, the overall atmosphere exerted some pressure on copper prices. Fundamentals side, on the supply end, arrivals of imported copper pulled back, while domestic source arrivals remained stable. However, approaching the month-end settlement period, suppliers showed weak willingness to sell, and spot circulation remained tight. Demand side, end-user pre-holiday stockpiling was largely completed, overall procurement sentiment was sluggish, and spot trades were mediocre. Inventory side, as of Thursday April 30, SMM copper cathode social inventory in major regions nationwide decreased by 5,600 mt WoW to 243,000 mt; current total inventory was 113,400 mt higher compared to the same period last year at 129,600 mt. SHFE copper 2606 contract closed at 101,030 yuan/mt. Based on BC copper 2606 contract at 89,460 yuan/mt, its after-tax price was 101,089 yuan/mt, and the price spread between SHFE copper 2606 and BC copper was -59, with the spread returning to an inverted state.

[SMM Brass Billet News] This week (4.24-4.30), the operating rate of the brass billet industry was recorded at 52.56%, down 0.35 percentage points WoW. Copper prices continued to fluctuate at highs, and enterprises' production mainly relied on previous orders on hand, while new orders continued to weaken.

This week (4.24-4.30), the operating rate of the brass billet industry was 52.56%, down 0.35 percentage points WoW and 9.94 percentage points YoY . Copper prices continued to fluctuate at highs, and enterprise production mainly relied on previous orders on hand, while new orders continued to weaken. Recycled brass raw materials supply remained tight, raw material prices were severely inverted, enterprises faced prominent cost pressure, and raw material inventories pulled back slightly to 4.11 days. Meanwhile, the industry gradually entered the traditional off-season, downstream cargo pick-up pace slowed down, and finished product inventories of sample enterprises increased slightly to 5.51 days. Looking ahead to next week (5.1-5.7), affected by factors such as some enterprises suspending production for the Labour Day holiday, weak new orders, and raw material prices staying high, SMM expects the industry operating rate to further decline 7.57 percentage points to 44.99%.

This week (April 24–April 30), SMM copper wire and cable enterprise operating rate was recorded at 65.9%, down 1.09 percentage points WoW. Copper prices hovered at highs this week, compounded by earlier concentrated procurement having front-loaded part of subsequent demand, and wire and cable industry orders continued their weak trend with operating rates declining further. End-use demand showed divergence: power sector orders remained subdued, mainly dragged by earlier demand release; while new energy and construction sector orders were relatively stable. Inventory side, despite the approaching Labour Day holiday, enterprises remained cautious in stockpiling sentiment due to elevated copper prices, with raw material inventory edging up 2.58% WoW; on finished product inventories, some wire and cable enterprises suspended quotations during the Labour Day holiday, and some end-users cautiously picked up goods in advance, driving finished product inventories down 2.42% WoW. Looking ahead, the wire and cable industry operating rate is expected to continue to pull back next week. Most enterprises have relatively short Labour Day holiday periods, with some choosing production cuts or continued production. Therefore, SMM expects next week (May 1–May 7) copper wire and cable operating rate to continue declining 3.12 percentage points WoW to 62.78%.

According to SMM, end-user air conditioning industry demand entered the off-season earlier than usual, significantly dragging down the enamelled wire industry. Persistently high copper prices also suppressed the release of orders. Combined with the concentrated front-loading of subsequent order demand in March, the enamelled wire industry's operating rate continued to pull back under the resonance of multiple factors, declining 1.07 percentage points this week. Next week is the Labour Day holiday, and most enterprises will follow their usual practice of not halting production but will conduct equipment maintenance based on their own order conditions, reducing overall operating loads. The operating rate is expected to decline further.

This week (April 24–April 30), the enamelled wire industry operating rate pulled back WoW....

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,073.5/mt, fluctuated upward to a high of $13,098/mt in early trading, then the copper price center gradually declined to $12,967/mt, and finally closed at $12,989/mt, down 0.35%, with trading volume at 19,400 lots and open interest at 276,000 lots, an increase of 42 lots from the previous trading day, indicating bears adding positions. Overnight, the most-traded SHFE copper 2606 contract opened at 101,190 yuan/mt, rose to 101,390 yuan/mt in early trading, then fluctuated downward throughout the session to a low of 100,790 yuan/mt near the close, and finally closed at 100,820 yuan/mt, down 0.43%, with trading volume at 37,700 lots and open interest at 195,000 lots, a decrease of 896 lots from the previous trading day, indicating bulls reducing positions.

On April 24, the SMM Imported Copper Concentrate Index (weekly) stood at -81.44 USD/dmt, down 2.83 USD/dmt from the previous reading of -78.61 USD/dmt. The deeply negative TC reflects the tightness in the global copper concentrate market, which has already shifted from market expectations to an actual rigid contraction in supply. In the first quarter of 2026, the world's leading mining companies frequently revised down their production guidance, with supply-side disruptions far exceeding early-year forecasts. Freeport significantly lowered its full-year 2026 copper production forecast from 1.542 million tonnes to approximately 1.406 million tonnes, with an expected recovery rate of only 65%, due to slower-than-expected mine recovery at its Grasberg site in Indonesia, affected by mudslides and ore moisture. In addition, road blockades caused by strikes at BHP's Escondida and Zaldivar mines have led to actual production impacts that remain to be monitored. According to SMM exclusive data, the global copper concentrate deficit in 2026 is estimated at 317,000 metal tonnes, a situation that may ease somewhat in 2029. In stark contrast to the persistently falling TC, domestic smelter operating rates remained high in Q1 2026. According to SMM data, China's electrolytic copper output in March 2026 reached 1.2061 million tonnes, up 5.58% month-on-month and 7.49% year-on-year. In Q1 2026, total electrolytic copper output was 3.5278 million tonnes, up 4.60% quarter-on-quarter and 10.45% year-on-year. SMM survey data shows that 11 smelters have confirmed maintenance schedules for Q2 2026. This means that domestic electrolytic copper output is expected to decline in Q2, with spot supplies likely tightening temporarily in May and June. However, some smelters have reported that due to high sulfuric acid prices, maintenance completion times may be brought forward. Sulfuric acid is currently the most important by-product revenue source for the copper smelting industry. According to SMM data, on April 24, 2026, China's copper smelting acid index stood at 1,660.5 RMB/ton, up 31.5 RMB/ton from the previous period. As sulfuric acid revenues have risen steadily from 890 RMB/ton at the start of 2026 to 1,660.5 RMB/ton in April 2026, based on the co-production of 3–4.5 tonnes of sulfuric acid per tonne of electrolytic copper, sulfuric acid income can now cover the copper concentrate procurement cost and part of the processing cost for smelters. The upward slope and magnitude of this increase exceed the deterioration in spot TC. The substantial boost in sulfuric acid profitability allows smelters to tolerate lower TC, creating a cycle of "higher sulfuric acid prices, lower TC." Meanwhile, rising gold and silver prices have further expanded smelters' comprehensive profit margins. Although the copper smelting segment is deeply loss-making, driven by the hefty profits from sulfuric acid, gold, and silver, domestic copper smelters have been able to maintain high operating rates without large-scale production cuts caused by deeply negative TC. Additionally, about 20% of the world's electrolytic copper comes from hydrometallurgical processes, with the DRC and Chile together accounting for nearly 80% of that. Hydrometallurgical copper production consumes large amounts of sulfuric acid, and sulfur is a key raw material for sulfuric acid. The current disruption in the Strait of Hormuz has cut off approximately 50–60% of Middle Eastern sulfur shipments by sea, pushing up sulfur and sulfuric acid prices. Worth noting is that as late April 2026 progresses, sulfuric acid export restrictions combined with increased domestic production have shown signs of price softening. If sulfuric acid prices continue to decline, it will directly squeeze the comprehensive profit margins of domestic smelters. At that point, the dual pressure of persistently low TC and falling sulfuric acid prices could trigger real production cuts on the smelting side. Although gold and silver prices do not directly determine TC trends, their macro-pricing logic as part of the non-ferrous metals sector is worth attention. The market has largely priced in the expectation that the Federal Reserve will not cut interest rates at all in 2026, with the first rate cut possibly delayed until July 2027. For copper, a delayed rate cut means no near-term easing of macro liquidity, but copper's core pricing logic remains the ongoing tug-of-war between tightening supply on the mining side and rigid demand. In other words, precious metals are under pressure, but industrial metals' pricing center remains in real supply-demand fundamentals, which explains why weaker gold and silver prices have not dragged copper prices lower. According to SMM, for Chinese smelters, domestic copper concentrate spot TC transactions are feasible in the range of -81 USD/dmt to -88 USD/dmt. Some holders have attempted to offer TC at -100 USD/dmt, while some smelters are willing to accept deliveries at the lower end around -90 USD/dmt. The downward trend in TC has not yet stopped, and smelter purchasing activity may have weakened slightly, but not significantly. Key areas to watch moving forward: Sulfuric acid side: The price trend will depend on the interplay of multiple factors. First, China's sulfuric acid export policy direction: if export restrictions continue, domestic sulfuric acid supply will be relatively abundant, and prices may fall from highs; if exports are temporarily allowed, overseas hydrometallurgical copper supply risks will rise, but domestic sulfuric acid prices may find support. Second, the recovery of sulfur supply: when shipping through the Strait of Hormuz returns to normal will directly affect the pace at which Middle Eastern sulfur can supplement global markets. Third, seasonal demand changes for downstream products such as phosphate fertilizers will also cause periodic price volatility for sulfuric acid. Mining side: Focus on the progress of the Grasberg conversion project, labor negotiation results at Chilean mines, and logistics stability at mines such as Las Bambas in Peru. Any new supply release will effectively ease TC pressure. Macro side: Monitor the Federal Reserve's monetary policy path, the U.S. dollar index, the actual driving effect of China's pro-growth policies on copper consumption, and whether the growth rate of copper demand in global new energy sectors is slowing marginally.

Today, the most-traded BC copper contract 2605 opened at 89,730 yuan/mt, touching a low of 88,820 yuan/mt at the beginning of the session before the center fluctuated upward, reaching a high of 90,060 yuan/mt near the close, and finally settled at 89,910 yuan/mt, down 0.56%. Open interest stood at 1,356 lots, down 313 lots from the previous trading day, and trading volume was 1,662 lots, down 2,632 lots from the previous trading day. On the macro front, the US prohibited domestic and foreign entities from paying Strait of Hormuz transit fees to Iran, or face significant sanctions risks. Iran's military stated the war was not over and had upgraded its equipment; the Revolutionary Guards claimed absolute control over the strait and demanded transit fees from passing vessels. Uncertainty over Middle East conflicts fueled inflation concerns, driving the US dollar index higher and weighing on copper prices. Fundamentals side, affected by month-end settlement, suppliers had weak willingness to sell, and available low-priced supplies were tight; demand side, downstream enterprises had largely completed stockpiling needs, and market trading was mediocre. SHFE copper 2605 contract closed at 101,620 yuan/mt. Based on the BC copper 2605 contract price of 89,910 yuan/mt, its after-tax price was 101,598 yuan/mt, and the price spread between SHFE copper 2605 and BC copper was 22 yuan/mt, showing a contango structure.