Driven by recovering risk appetite and China's peak demand season, copper prices both in China and abroad bottomed out since late March. However, as SHFE copper returned to the 100,000 level, the tug-of-war between longs and shorts increased, and futures prices shifted to range-bound consolidation. After the Labour Day holiday, copper prices quickly resumed their upward momentum. Today, prices opened higher with a gap and continued to rise, with SHFE copper just one step away from the record high set at the end of January, while LME copper hit a new closing high. What is fueling such strong confidence behind this rally? Deepening Ore-Side Vulnerability Intensifies Supply Disruption Concerns Since the suspension of First Quantum's Cobre Panama copper mine at the end of 2023, spot TC for copper concentrates in China has been caught in an endless downward spiral. Falling from around $80/dmt at the end of 2023, it largely dropped to single-digit levels and moved sideways in 2024. Entering 2025, it further plunged into negative territory, mainly due to successive production disruptions at world-class copper mines including Ivanhoe Mines' Kakula, Codelco's El Teniente, and Freeport's Grasberg mine in Indonesia. Entering 2026, global major copper ore supply growth remained limited, and the ore tightness showed no improvement. The latest data showed that spot TC for copper concentrates in China had fallen below -$90/dmt. With long-term contract TC at zero and spot TC declines accelerating, domestic smelters' production profits mainly relied on surging sulphuric acid prices and firm by-product prices of gold, silver, and other metals to compensate. It was reported that current sulphuric acid revenue could already cover smelters' procurement costs for copper concentrates and part of the processing costs, enabling domestic smelters to maintain relatively high operating rates, and the ore tightness had not yet notably transmitted to the smelting side. It is worth noting that sulphuric acid is not only a by-product of pyrometallurgy but also a core production material for SX-EW copper. For every 1 mt of copper produced, 5–6 mt of sulphuric acid is consumed. Sulphuric acid costs account for 40%–50% of total SX-EW copper production costs, and SX-EW copper production accounts for approximately 20% of global mine copper production. Since the beginning of this year, sulphuric acid prices surged sharply due to multiple factors, and ex-China sulphuric acid supply was periodically disrupted, raising concerns that copper supply in some countries could be affected. Focusing on the reasons behind the sulphuric acid price surge: on one hand, since the escalation of the Middle East conflict on February 28, shipping through the Strait of Hormuz has been broadly restricted and has recently faced a dual blockade by Iran and the US. Sulphur exports from the Middle East have been impacted, with the DRC and Zambia being the most concentrated SX-EW copper producing regions that are highly dependent on sulphur imports from the Middle East. As sulphur supply has been constrained, sulphuric acid prices have naturally risen in tandem, not only raising local SX-EW copper production costs but also potentially triggering further production cuts if the Strait of Hormuz blockade continues and sulphur disruption risks escalate. On the other hand, to prioritise domestic spring ploughing phosphate fertiliser production and support new energy industry expansion, China has imposed a phased ban on sulphuric acid exports according to industry sources. Chile has a relatively high dependence on Chinese sulphuric acid, with SX-EW copper accounting for around 20% of its output, and the market is also concerned that Chile's SX-EW copper production may be affected. In addition, against the backdrop of an already fragile copper ore supply, frequent news shocks from outside China recently have undoubtedly intensified market concerns. Last week, market rumours suggested that the full restart of Indonesia's Grasberg copper-gold mine, which declared force majeure in September last year, had been delayed by one year, driving SHFE copper sharply higher in the afternoon of 8 May. However, according to the latest update from Freeport-McMoRan, the company still expects Indonesia's Grasberg copper-gold mine to fully resume production by the end of 2027, reaffirming the plan outlined last month and refuting reports that production resumptions could be delayed to 2028. Furthermore, yesterday Peru declared an emergency energy decree due to a natural gas pipeline explosion. Peru's copper production reached 2.63 million mt in metal content last year, ranking third globally. Copper mining and smelting are relatively sensitive to power stability, and the market is concerned that Peru's energy strain may disrupt local copper supply. Overall, China's copper cathode production remains relatively stable, but some major global miners lowered their full-year production guidance in Q1, the ore tightness persists, sulphuric acid supply — a core raw material for ex-China SX-EW copper — is constrained, and there are multiple supply disruption themes on the copper supply side, which can easily boost copper prices once the macro front stabilises. Global Copper Visible Inventory Divergence: China Destocking Provides Support Last year, driven by the US government's threat to impose additional tariffs on imported copper, global copper continued to flow into the US, causing COMEX copper inventories to accumulate continuously while copper inventories in non-US regions remained low, providing sustained support for copper prices. In February this year, the US Supreme Court struck down most of the tariff measures introduced by the Trump administration in 2025. The Trump administration subsequently turned to Section 122 of the Trade Act of 1974 to push new global tariff policies. On 7 May, the US Court of International Trade issued a ruling stating that the legal basis for imposing a 10% global import tariff was invalid. The tug-of-war between US courts and the Trump administration over tariffs has continued recently, but the market has certain expectations that the US may subsequently impose additional tariffs on imported copper. Under such expectations, the price spread between COMEX copper and LME copper has shown a slight strengthening trend recently, meaning copper in LME warehouses still has the potential to flow to the US. Specifically, COMEX copper inventories have continued to rebound since mid-April, rising from around 590,000 mt to the latest 620,000 mt, again hitting a multi-year high. Correspondingly, LME copper inventories pulled back from around 400,000 mt in mid-April, declining to 397,700 mt on 6 May. They have rebounded with fluctuations recently, but overall inventories have not exceeded the over-12-year high set in mid-April. SHFE copper inventories fell for the eighth consecutive week, currently dropping to 181,300 mt, the lowest since the beginning of the year. Data source: Webstock Inc. Overall, on the macro front, there are currently disagreements in US-Iran negotiations, but both sides continue the ceasefire with no recent signs of escalation in conflict. Energy prices pulled back from late April levels, inflation concerns eased somewhat, the US dollar index was in the doldrums, and combined with the AI boom lifting global stock markets, market risk appetite was moderate, providing a fertile ground for copper prices to strengthen. Focusing on copper's own fundamentals, inventories outside China remained elevated, but significant prior destocking of China inventories provided support. The ore tightness was difficult to reverse, and supply-side narratives were abundant, meaning copper prices may still hold up well. However, it is worth noting that the Middle East situation remains the biggest macro variable, and the policy path following the Fed Chairman's power transition also deserves close attention. (Webstock Composite)

SMM News, May 12: Metals market: As of the midday close, domestic base metals mostly rose. SHFE copper was up 2.51%. SHFE aluminum was up 0.18%. SHFE lead was down 0.99%. SHFE zinc was up 1.8%. SHFE tin was up 1.47%. SHFE nickel was down 0.71%. In addition, the most-traded casting aluminum futures were up 0.19%, and the most-traded alumina futures were down 1.24%. The most-traded lithium carbonate futures were up 1.63%. The most-traded silicon metal futures were down 2.84%. The most-traded polysilicon futures continued the downtrend from the previous two trading days, falling 4.37%. Ferrous metals mostly fell. Iron ore was flat at 820.5 yuan/mt. Rebar was down 0.18%. Hot-rolled coil edged up slightly. Stainless steel was down 0.13%. Coking coal and coke: the most-traded coking coal contract was down 2.54%, and the most-traded coke contract was down 1.21%. Overseas base metals: as of 11:43, LME metals were nearly all lower. LME copper edged up slightly. LME aluminum was down 0.74%. LME zinc edged down slightly. LME lead was down 0.53%. LME tin was down 0.16%. LME nickel was down 1.22%. Precious metals: as of 11:43, COMEX gold was up 0.13%, and COMEX silver was up 1.06%. Domestic precious metals: the most-traded SHFE gold contract was up 0.36%, and the most-traded SHFE silver contract was up 6.43%. In addition, as of the midday close, the most-traded platinum futures were up 2.9%, and the most-traded palladium futures were up 0.44%. As of the midday close, the most-traded Europe containerized freight index contract was up 1.23%, at 2,474.5 points. As of 11:43 on May 12, midday futures quotes for selected contracts: Spot Prices and Fundamentals Copper: Today in Guangdong, spot prices of #1 copper cathode against the front-month contract: high-quality copper was quoted at a premium of 260 yuan/mt, down 30 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 190 yuan/mt, down 30 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 120 yuan/mt, down 30 yuan/mt from the previous trading day. The average price of Guangdong #1 copper cathode was 104,355 yuan/mt, up 1,385 yuan/mt from the previous trading day. The average price of SX-EW copper was 104,325 yuan/mt, up 1,395 yuan/mt from the previous trading day. Spot market: Guangdong inventory increased again today, mainly due to increased arrivals and weak consumption... Macro Front China: The PBOC conducted 500 million yuan of 7-day reverse repo operations in the open market at an interest rate of 1.40%, unchanged from the previous day. No reverse repos matured today. [CICC: China's PPI and CPI are expected to have further upside room on a YoY basis over the next two months] CICC commented on April 2026 price data, noting that PPI rose 1.7% MoM in April, with the YoY increase expanding from 0.5% in the previous month to 2.8%. The PPI increase exceeded expectations, mainly because price gains were highly concentrated in the energy and chemical industry chain. April CPI rose 0.3% MoM, stronger than seasonal patterns, with CPI YoY growth also rebounding from 1.0% in the previous month to 1.2%, primarily driven by energy prices and holiday travel demand. Looking ahead, CICC believes that against the backdrop of ongoing tug-of-war in US-Iran negotiations, international oil prices will most likely fluctuate at highs. Given the time lag in price transmission from oil price shocks, PPI and CPI YoY are expected to still have upside room in the next two months. However, this round of production-side price recovery shows clear structural divergence, with upstream price increases significantly stronger than downstream. In an environment of weak end-use consumption demand, imported cost-push inflation is likely to continue suppressing profitability in mid- to downstream industries. US dollar: As of 11:43, the US dollar index rose 0.21% to 98.14. On May 11 local time, the US Customs and Border Protection announced that the first batch of refunds for illegal tariffs will begin on May 12, with some US enterprises set to receive tax refund funds. The US government launched an online application platform last month, allowing enterprises to apply for refunds of tariffs previously paid but later ruled illegal by the US Supreme Court. US Customs data shows that over 330,000 importers paid a total of approximately $166 billion in related tariffs. As of April 26, at least 75,000 enterprises had submitted refund applications. (CCTV News) The market is focused on copper data to be released tonight, which will help assess the US Fed's interest rate path. According to CME "FedWatch": The probability of the US Fed maintaining rates unchanged through June is 97.7%, with a 2.3% probability of a cumulative 25 basis point cut. The probability of maintaining rates unchanged through July is 94.6%, with a 5.4% probability of a cumulative 25 basis point cut and a 0.1% probability of a cumulative 50 basis point cut. Other currencies: Japanese Finance Minister Katayama Satsuki stated that following her meeting with US Treasury Secretary Bessent in Tokyo, her team is conducting smooth cooperation with the US side in the foreign exchange policy area. Katayama said she would not comment on Bessent's specific remarks. This is Bessent's third visit to Japan since assuming his cabinet position. Markets are closely watching this meeting, as it comes less than two weeks after Tokyo authorities' suspected large-scale yen intervention lasting several days to boost the yen exchange rate. Bessent has previously hinted that he is critical of direct market intervention, instead favoring support for the yen through the Bank of Japan tightening monetary policy. The Japanese authorities likely first intervened in the market on April 30, when the Bank of Japan's decision to keep policy unchanged, combined with hawkish signals released by the US Fed, jointly pushed the yen-to-dollar exchange rate past the 160 level. Data analysis showed that the Japanese authorities may have deployed approximately $24.7 billion in this operation, followed by an additional approximately $30 billion in a subsequent round of intervention. Katayama said she also discussed topics such as artificial intelligence and critical minerals with Bessent. (Jin10 Data) On the macro front: Today saw the release of Germany's April CPI MoM final reading, Germany's May ZEW Economic Sentiment Index, Eurozone May ZEW Economic Sentiment Index, US April NFIB Small Business Optimism Index, US ADP Employment Change for the week ending April 25, US April non-seasonally adjusted CPI YoY, US April seasonally adjusted CPI MoM, US April seasonally adjusted core CPI MoM, and US April non-seasonally adjusted core CPI YoY. In addition, attention should also be paid to: the Bank of Japan releasing the Summary of Opinions from its April monetary policy meeting; permanent FOMC voter and New York Fed President Williams participating in a panel discussion on monetary policy; Vice Premier He Lifeng leading a delegation to South Korea from May 12 to 13 for trade consultations with the US side. Crude oil: As of 11:43, both benchmarks rose, with WTI up 0.95% and Brent up 0.87%. Uncertainty over the prospects of US-Iran negotiations kept market concerns about supply alive, supporting oil prices. The US Strategic Petroleum Reserve (SPR) allocated 53.5 million barrels of crude oil to companies including commodity trader Trafigura Group and US refiner Marathon Petroleum, to help ease the oil price surge triggered by the Iran war. Ahead of the US summer driving peak, the US government is releasing near-record levels of crude oil to the market to push down oil prices. The crude oil will be released from June to August, when refineries will ramp up capacity to meet peak gasoline demand. This second-largest SPR sale in history is also part of a global effort led by the International Energy Agency to bring down oil prices. Last week, the US already released a daily average of 1.22 million barrels of crude oil under the aforementioned framework, setting a historical record. The Trump administration has pledged to release 172 million barrels of crude oil through a so-called "exchange program." Under this mechanism, crude oil is lent to enterprises and must later be returned in physical form. As of now, the US has agreed to release 133.1 million barrels of crude oil. (Jin10 Data) Spot market overview: ► ► ► ► ► ► ► ► ► ► ►

According to the latest statistics from the GACC, total iron ore imports in April 2026 amounted to 103.854 million tonnes, representing a decrease of 889,000 tonnes from the previous month, a month-on-month decline of 0.8%. From January to April, cumulative imports of iron ore and its concentrates reached 418.587 million tonnes, marking an 8.0% increase year-on-year. In April, steel mills generally exhibited subdued purchasing activity due to the limited cost-effectiveness of imported iron ore. Concurrently, rising premiums and shipping costs further compressed import margins, diminishing the purchasing intentions of some importers. Nonetheless, strong downstream demand resulted in high utilisation rates of blast furnaces within steel mills, sustaining elevated levels of pig iron production and maintaining robust iron ore demand. Additionally, ongoing geopolitical tensions in the Middle East led to adjustments in some iron ore shipping routes originally designated for export to that region, with China increasingly serving as a transit and receiving hub, which contributed to an overall increase in China's iron ore imports. Consequently, despite a slight decrease in April, import levels remained broadly stable under the influence of various factors. Looking ahead to May, the gradual recovery of port facilities in major importing countries from weather-related disruptions is expected to facilitate a significant increase in shipments from key iron ore-producing nations. Meanwhile, steel mills are anticipated to sustain high operating rates driven by profit margins, indicating that demand for iron ore imports is likely to remain strong. Furthermore, overseas mines that commenced production earlier are still in the ramp-up phase, which will support continued shipment growth. The Simandou iron ore mine is projected to reach its first shipping peak in May, with the majority of shipments destined for China. However, the Labour Day holiday in May, which reduces working days and could impact customs clearance efficiency and data collection, may result in a marginal increase in China's iron ore imports compared to April.

[Toyota's April Sales in China Fell 25% YoY] Toyota's April sales in China fell 25% YoY to 106,500 units. Affected by geopolitical tensions driving up international oil prices, Toyota's internal combustion engine vehicle sales declined significantly. In addition, many consumers chose to delay their car purchase plans to wait for Labour Day holiday promotional events. FAW Toyota, Toyota's joint venture with China FAW Group, saw April sales drop 38% YoY to 40,000 units, while GAC Toyota, its joint venture with GAC Group, saw sales decline 10% YoY to 54,100 units. Toyota's luxury brand Lexus saw sales fall 29% YoY, selling only 11,200 units. In contrast, Toyota's EV sales in China performed strongly, surging 88% YoY to 17,700 units.

[JPMorgan: Overall Auto Market Recovery Remains Weak, BYD's Full-Year Sales Still Expected to Grow Against the Trend] JPMorgan stated that despite cooling demand in the overall EV market, BYD is expected to achieve positive sales growth for the full year, benefiting from improved expectations in the Chinese market and aggressive global expansion. In a research report released after post-holiday communication and survey with BYD's management, the investment bank's analysts noted that BYD expects domestic sales to reach 3.5 million to 4 million units this year. This performance guidance implies that its China domestic market growth could reach up to 13%, far exceeding market analysts' previous widespread expectations of flat sales or even a slight decline.

During the survey period (May 5-11), the operating rate and capacity utilization rate of rebar and wire rod in the Central China region both increased.

In April, affected by multiple factors including declining end-user home appliance demand, prior concentrated orders having front-loaded subsequent procurement needs, and high copper prices being under pressure, the enamelled wire industry's operating rate fell both YoY and MoM. With continued decline in home appliance end-user demand, compounded by production disruptions during the Labour Day holiday and the approaching off-season, SMM expects the enamelled wire industry's operating rate in May to pull back by 3.27 percentage points MoM and 0.21 percentage points YoY.

According to SMM, the comprehensive operating rate of the enamelled wire industry in April was 75.31%, down 2.44 percentage points MoM and 1.48 percentage points YoY. Specifically, the operating rate of large enterprises was 80.19%, medium-sized enterprises 62.86%, and small enterprises 71.53%.

SMM Morning Meeting Summary: Overnight, LME copper opened at and dipped below $13,693.5/mt, moved sideways at the beginning of the session, then the copper price center fluctuated upward and probed up to $13,969/mt near the end of the session, before fluctuating downward to finally close at $13,920/mt, up 2.84%, with trading volume at 26,800 lots and open interest at 272,000 lots, an increase of 1,201 lots from the previous trading day, indicating bulls adding positions. Overnight, the most-traded SHFE copper 2606 contract opened at 105,500 yuan/mt, dipped to 105,390 yuan/mt at the beginning of the session, then the copper price center gradually shifted upward and touched a high of 107,350 yuan/mt near the end of the session, before fluctuating downward to finally close at 106,770 yuan/mt, up 2.35%, with trading volume at 75,900 lots and open interest at 209,000 lots, an increase of 4,829 lots from the previous trading day, indicating bulls adding positions.

Today, the most-traded BC copper contract 2606 opened at 92,910 yuan/mt, touching a low of 92,060 yuan/mt at the beginning of the session before the center fluctuated upward. It probed up to 92,930 yuan/mt near the close and ultimately settled at 92,820 yuan/mt, down 0.03%. Open interest stood at 9,532 lots, down 304 lots from the previous trading day, while trading volume was 8,379 lots, down 736 lots from the previous trading day. On the macro front, US April non-farm payrolls added 115,000 jobs, significantly exceeding market expectations. The unemployment rate remained stable, but the consumer confidence index fell to a new periodic low. Meanwhile, disturbed by concerns over ore-side shortages, copper prices exhibited a high-level fluctuating trend moving sideways. Fundamentals side, short-term import arrivals saw limited incremental volumes, domestic supply arrivals remained relatively low, and the supply landscape stayed tight. Demand side, downstream acceptance of high copper prices was limited, with procurement mainly driven by rigid demand and insufficient willingness to chase higher prices. As of Monday, May 11, SMM copper inventories across mainstream regions nationwide decreased by 10,300 mt WoW from after the holiday to 242,600 mt. The SHFE copper 2606 contract closed at 104,620 yuan/mt. Based on the BC copper 2606 contract price of 92,820 yuan/mt, its after-tax price was 104,887 yuan/mt. The price spread between the SHFE copper 2606 contract and BC copper was -267 yuan/mt, showing an inversion that narrowed from the previous day.