[SMM Analysis: Copper Prices Rebound at Week's End, Marginal Improvement in Copper Scrap Supply] In the first week of July (June 30-July 3), the copper scrap market operated under three overlapping factors: the second week after the implementation of the reverse invoicing regulation, the onset of the high-temperature off-season, and copper prices holding the 100,000 yuan mark. The overall supply-demand weakness that began in June persisted. The most-traded SHFE copper contract moved sideways within the 102,020-103,070 yuan/mt range, never breaching the psychological level of 100,000 yuan/mt, while the wait-and-see sentiment among end-users remained unabated...

SMM Morning Call Summary: Overnight, LME copper opened at $13,120/mt, dipped to a low of $13,103.5/mt in early trading, then the price center drifted higher to touch $13,364/mt, after which it swung wildly and finally closed at $13,330.5/mt, down 0.37%, with trading volume at 23,000 lots and open interest at 242,000 lots, a decrease of 3,122 lots from the previous trading day, indicating long position reduction. Overnight, the most-traded SHFE copper 2608 contract opened at 101,830 yuan/mt, dipped to 101,640 yuan/mt in early trading, then the price center moved sharply higher to touch 102,930 yuan/mt, after which it swung wildly and finally closed at 102,520 yuan/mt, up 0.07%, with trading volume at 50,000 lots and open interest at 154,000 lots, a decrease of 286 lots from the previous trading day, indicating short position reduction.

This week, the copper scrap market operated under the interweaving influences of fluctuating copper prices, the approaching Dragon Boat Festival holiday, and ongoing compliance inspections on "reverse invoicing," presenting structural characteristics of "regional divergence in supply, essential demand-driven procurement, and transactions driven by invoices rather than prices

SMM Morning Meeting Minutes: Overnight, LME copper opened at $13,744/mt, dipped to $13,725/mt shortly after the opening, then its price center fluctuated upward to touch $13,822.5/mt, followed by wild swings and finally closed at $13,796.5/mt, up 0.61%. Trading volume reached 16,600 lots, open interest stood at 263,000 lots, a decrease of 3,509 lots from the previous trading day, manifested as bearish position reduction. Overnight, the most-traded SHFE copper 2607 contract opened at 105,490 yuan/mt, hitting a high of 105,700 yuan/mt right after the opening, then its price center fluctuated downward all the way, touching a low of 105,060 yuan/mt near the end of trading, and finally closed at 105,210 yuan/mt, down 0.14%. Trading volume reached 25,000 lots, open interest stood at 147,000 lots, a decrease of 1,715 lots from the previous trading day, manifested as bullish position reduction.

In May 2026, the operating rate of secondary copper rod was 14.7%, higher than expectations of 12.17%, up 1.91 percentage points MoM and down 15.22 percentage points YoY. During May, China's secondary copper rod market as a whole remained caught in a combination of high copper prices, sharp fluctuations, and regulatory compliance pressure. The month was marked not by a one-sided shortage or surplus, but by a more intractable structural stalemate

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,424/mt, swung wildly in early trading and touched a low of $13,398/mt, then the price center fluctuated upward, and near the close it rose to a high of $13,612.5/mt before finally closing at $13,575/mt, up 0.94%. Trading volume reached 21,100 lots, and open interest stood at 265,000 lots, a decrease of 2,125 lots from the previous trading day, indicating bears reduced positions. Overnight, the most-traded SHFE copper 2607 contract opened at 103,280 yuan/mt, dipped to 103,010 yuan/mt right at the open, then fluctuated upward and touched a high of 103,850 yuan/mt near the close, finally settling at 103,540 yuan/mt, up 0.13%. Trading volume reached 30,100 lots, and open interest amounted to 152,400 lots, a decrease of 8 lots from the previous trading day, indicating bears reduced positions.

SMM Morning Meeting Summary: Last Friday night, LME copper opened at $13,788/mt, touched a high of $13,803/mt at the beginning of the session, then the copper price center continuously moved downward, dipping to $13,499.5/mt near the end of the session, and finally settled at $13,517/mt, a decline of 2.78%. Trading volume reached 25,200 lots, and open interest was 273,000 lots, increasing by 1,576 lots compared to the previous trading day, indicating an increase in bearish positions. Last Friday night, the most-traded LME copper contract 2607 opened at 104,790 yuan/mt, rose to 105,000 yuan/mt at the start, then fluctuated downward throughout the session, dipping to 103,600 yuan/mt near the end, and finally settled at 103,800 yuan/mt, a decline of 1.84%. Trading volume reached 62,000 lots, and open interest was 167,000 lots, decreasing by 6,309 lots compared to the previous trading day, indicating a reduction in bullish positions.

Affected by copper prices fluctuations, the operating rate of China's copper cathode rod industry pulled back slightly in recent weeks, though overall performance was better than earlier expectations. Meanwhile, social inventory and enterprise finished product inventories showed diverging trends. I. Operating Rate Pulled Back WoW, Actual Performance Better Than Expected Last week (May 15–May 21), the operating rate of major copper cathode rod enterprises in China came in at 61.97%, down 1.54 percentage points WoW, but 1.12 percentage points above prior expectations, and down 8.67 percentage points YoY. Copper prices rose first and then fell this week. The price rise phase notably suppressed downstream purchasing sentiment, with enterprises receiving fewer new orders and a slowdown in the cargo pick-up pace, leading to continuous accumulation of finished product inventories. Some enterprises proactively cut production to ease inventory pressure. As copper prices gradually pulled back, downstream enterprises began to progressively place orders and pick up goods, accelerating the pace of order delivery, which provided some support to operating rates and resulted in actual operating performance exceeding earlier enterprise expectations. II. Divergence in Inventory Trends: Social Inventory Continued to Build Up While Enterprise Finished Product Inventory Shifted from Buildup to Slight Destocking (i) Social Inventory Continued to Build Up but Remained at a Medium-to-Low Level Overall From the perspective of social inventory, according to SMM weekly data on copper rod social inventory, for the week of May 22, 2026, China's total copper rod social inventory stood at 17,100 mt, having built up for two consecutive weeks. This represented a rebound from the mid-April low of 13,400 mt, but remained at a medium-to-low level overall. Inventory pressure was relatively high at the beginning of the year, with social inventory reaching as high as 38,000 mt at the end of January. In March, copper prices pulled back significantly, driving downstream demand release and a rapid decline in inventory to 14,000 mt. The overall destocking trend was notable in Q1. Entering Q2, copper prices gradually stabilized, market demand operated steadily, and inventory fluctuations narrowed accordingly. (2) Enterprise raw material inventory fluctuations were limited, and finished product inventories saw destocking this week Enterprise inventory side, copper cathode rod enterprises continued the purchasing as needed model for raw material procurement, flexibly adjusting according to production pace. Overall raw material inventory fluctuations were relatively small, pulling back slightly WoW. More notably, on the finished product inventories side, downstream demand recovered after copper prices pulled back, and pickup volume increased. Meanwhile, enterprises proactively cut production and prioritized digesting finished products. Last week, finished product inventories declined 3.16% WoW, and the results of production cuts and destocking became evident. III. Monthly Days of Finished Product Inventories Continued to Rise From a longer time horizon, SMM copper cathode rod monthly days of finished product inventories hit a cyclical peak in February. In March, copper prices pulled back sharply, new orders surged in the market, downstream cargo pick-up enthusiasm improved, and warehouse withdrawals consistently exceeded warehouse inflows, causing finished product inventories to quickly pull back to low levels. In April, copper prices fluctuated upward, downstream procurement sentiment turned cautious, the pace of cargo pick-up slowed down, and inventory buildup occurred again. Entering May, overall industry operating rates remained weak, downstream buyers only made just-in-time procurement, and cargo pick-up intensity continued to weaken. Days of finished product inventories are expected to continue rising this month. IV. Market Outlook: Operating Rates in the Doldrums, Expected to Gradually Stabilize in the Short Term SMM expects that the overall operating rates of copper cathode rod enterprises will maintain a fluctuating and weak trend going forward. Currently, enterprises have insufficient orders on hand, and the progress of finished product destocking has fallen short of expectations, with operating rates clearly under pressure. However, new orders have gradually materialized during the copper price pullback phase, alleviating enterprises' willingness to cut production to some extent. Meanwhile, capacity previously under maintenance has successively resumed production, also providing support for industry operating rates. Overall, copper cathode rod operating rates are expected to gradually stabilize. However, continued attention should be paid to the direction of copper prices. If copper prices continue to fluctuate at highs and suppress downstream purchasing demand, there remains a risk that operating rates may fall short of expectations.

Copper prices experienced wild swings this week, with a cumulative decline of over 400 yuan/mt. During the period, news of delayed production resumptions at an Indonesian copper mine triggered a single-day surge of 1,630 yuan/mt, which quickly pulled back. The wild swings dominated overall sentiment across the secondary copper industry chain

The copper scrap market this week operated under the impetus of a strong macro-driven rally in copper prices. Futures and spot prices rose in tandem, but the intensifying divergence in sentiment and behavior between upstream and downstream participants along the industry chain lent the market a complex character best described as "price-driven transactions amid an unchanged weak supply-demand landscape.