SMM Analysis | June 30 marks a critical milestone in the U.S. Section 232 copper investigation. Will refined copper tariffs proceed as expected? Whether the outcome is a broad tariff, targeted measures, or a delay and exemption, the decision could reshape the COMEX–LME arbitrage, U.S. physical premiums, global copper trade flows, and regional supply dynamics.

This week, the macro narrative shifted from geopolitics to monetary policy. On June 17, the FOMC took a hawkish hold, keeping rates unchanged but signaling a bias toward further tightening, with the new Fed Chair Warsh reiterating the commitment to restoring price stability. The US dollar strengthened and rate hike expectations heated up, combined with sluggish traditional copper consumption sectors in China, leaving copper prices under pressure and briefly falling below $6/lb early in the week to a seven-week low. On the geopolitical front, the US and Iran reached a preliminary memorandum of understanding in mid-June. Crude oil extended its decline, with WTI falling below $70/bbl to near pre-war levels, and the earlier geopolitical risk premium largely faded. Mid-week, supported by the delay of full production resumption at Grasberg to early 2028 and dip-buying, copper prices stabilized slightly; late in the week, inflation data released largely met expectations, improving sentiment at the margin. Overall, a hawkish Fed and a strong dollar exerted major downward pressure, while cooler geopolitics eroded supply-side risk premiums, leading copper prices to retreat from highs with a lower center. Fundamentals side, the price pullback activated downstream restocking. After copper prices fell to a seven-week low, downstream dip-buying and restocking orders rebounded notably, with SMM social inventory turning to destocking again; spot premiums remained firm, and demand displayed a price-sensitive pattern of dipping at lows but lacking momentum at higher prices. On the supply side, imported and domestic arrivals were steady, while the approaching month-end delivery caused some disruption to the nearby contract structure. The overall picture reflected price-driven impulse restocking and destocking but a weak consumption base, providing some support to the downside but limited upside momentum for copper prices. Looking ahead to next week, the macro focus will be on the US refined copper tariff ruling on June 30 (which directly affects COMEX-LME spreads and arbitrage flows to ports), along with the progress on the US-Iran agreement and the resumption of navigation in the Strait of Hormuz; the hawkish Fed and strong US dollar will continue to weigh on risk appetite in the near term. Fundamentals side, the Grasberg production resumption delay and dip-buying will provide support to the downside, but weak consumption at higher prices and fading geopolitical premiums will cap upside potential. LME copper is expected to trade at $12,700–$13,300/mt, while SHFE copper is expected to trade at 101,000–103,500 yuan/mt, characterized by sideways movement after retreating from highs, with a weaker center; spot premiums are expected to consolidate at lows, with attention on the tariff ruling and the sustainability of restocking after month-end delivery.

As the United States continues to strengthen critical minerals security, domestic manufacturing, and copper supply chain resilience, limited smelting capacity is increasingly emerging as a key challenge. The country currently operates only a handful of primary copper smelters, while low treatment and refining charges (TC/RCs) and rising environmental compliance costs continue to pressure profitability. Alongside efforts to expand domestic mining and manufacturing capacity, maintaining existing smelting operations and securing refined copper supply will remain critical to the long-term success of U.S. copper supply chain strategy. Continued pressure on the smelting sector could limit the country's ability to reduce reliance on imported refined copper in the near term.

The global copper scrap market is entering a period of structural tightening as geopolitical tensions and industrial policy increasingly reshape trade flows. The relationship between the United States and China sits at the center of this transition, particularly as Washington considers restricting exports of high-quality copper scrap in 2027 while China remains heavily dependent on imported secondary copper feedstock. China’s copper scrap imports remained strong in 2024 at 441,080 MT, underscoring continued demand from secondary refiners serving the EV, renewable energy, power grid, and manufacturing sectors. However, imports have collapsed in 2025 to 143,271 MT, with current projections for 2026 falling further to just 5,305 MT. The sharp decline signals a rapid deterioration in China’s direct access to imported scrap feedstock amid rising geopolitical friction and tariffs. China’s existing 10% tariff on US-origin scrap has already reduced the competitiveness of direct shipments, although clean high-grade material has continued to move because of favorable processing economics. Trade flows indicate that copper scrap is increasingly being rerouted through Southeast Asia rather than moving directly from the United States into China. US copper scrap exports to ASEAN rose from 170,687 tonnes in 2024 to 222,993 tonnes in 2025, while Chinese imports of copper scrap from ASEAN increased from 434,176 tonnes to 529,345 tonnes over the same period. The correlation strongly suggests ASEAN is emerging as a critical intermediary hub for scrap aggregation, processing, blending, and re-export into China. This shift reflects a broader restructuring of the global scrap trade as market participants adapt to tariffs, geopolitical risk, and the growing probability of tighter controls on high-quality US scrap exports. Countries such as Malaysia, Thailand, and Vietnam are increasingly functioning as alternative routing channels within the global secondary copper supply chain. The timing is significant because the United States continues to export around 1 million tonnes of copper scrap globally in 2025 while domestic secondary refinery production remains limited at approximately 50kt. This imbalance is becoming central to the policy debate in Washington. As US demand for copper accelerates through grid modernization, electrification, AI-driven data center expansion, and defense manufacturing, policymakers are increasingly questioning whether high-grade recyclable copper should continue flowing overseas while the US remains dependent on imported refined copper. Current policy discussions focus on retaining a larger share of premium copper scrap within the domestic market beginning as early as 2027. Although proposals currently stop short of a full export ban, any retention mechanism would still materially reduce export availability for high-quality grades such as bare bright copper and No.1 copper scrap. For China, tighter access to premium scrap has important implications beyond the secondary market. High-quality scrap directly competes with refined copper cathode because it offers high recovery rates with lower processing intensity than primary smelting. If imported scrap availability continues to tighten, Chinese refiners will likely need to increase refined copper purchases to maintain output levels. This dynamic could become increasingly supportive for refined copper markets globally. The primary copper market is already facing structural constraints from weak mine supply growth, declining ore grades, permitting delays, and years of underinvestment in new projects. A simultaneous tightening in high-grade scrap availability would amplify pressure on refined copper balances precisely as demand linked to electrification continues to strengthen. As a result, the market could see narrower scrap discounts relative to cathode, firmer copper premiums in Asia, and increased volatility across both COMEX and LME pricing. The secondary copper market is therefore becoming an increasingly important variable in the broader refined copper outlook. Ultimately, the copper scrap market is no longer operating purely on economic arbitrage. Strategic resource security is becoming a defining driver of trade flows and policy decisions. The rapid growth in ASEAN intermediary trade, combined with collapsing direct Chinese scrap imports and growing US policy intervention, signals that the global copper supply chain is entering a new phase of fragmentation — one that is likely to tighten both scrap and refined copper markets into 2026 and beyond. Author: Shairaz Ahmed, Principal Market Analyst For more information or to discuss market dynamics, you can contact me on shairazahmed@smm.cn

The International Copper Study Group (ICSG) released preliminary data on global copper supply and demand for March 2026 in its monthly bulletin published in May 2026. Preliminary data indicated that global copper mine production in Q1 2026 was basically flat, with copper concentrates production declining by 1.1%, offset by a 3.3% increase in solvent extraction-electrodeposition (SX-EW) production. Although global mine production benefited from additional output driven by capacity ramp-up of projects in several countries, significant declines in copper concentrates production in Chile, the DRC, and Indonesia offset global growth. In Indonesia, copper concentrates production at the Grasberg mine fell by 42%, as the severe mud inflow incident that occurred in September last year continued to affect the mine's production. Chile's mine production declined by 5.8%, with increased production at the Collahuasi and Quebrada Blanca mines offset by production cuts at the Spence, El Teniente, Escondida, and Los Pelambres mines. The DRC's mine production is estimated to have grown by only 0.5%: SX-EW production increased by approximately 10%, but was partially offset by a 36% decline in copper concentrates production due to reduced output at the Kamoa mine (affected by the 2025 earthquake event). In Peru, copper mine production grew by 3.3%, primarily driven by increased production at the Antamina, Las Bambas, and Antapaccay mines, which more than offset production declines at Southern Peru Copper, Quellaveco, and Marcobre. Mongolia's copper concentrates production is estimated to have grown by approximately 36%, benefiting from the capacity ramp-up of the Oyu Tolgoi underground project. Preliminary data indicated that global copper cathode production grew by approximately 4.5% in Q1 2026, with primary copper (electrolysis and ore electrodeposition) production increasing by 3.8% and secondary copper (from scrap) production increasing by 7.6%. China and the DRC, which currently account for approximately 60% of global production, saw their combined production increase by an estimated 9% (China 8.8%, DRC 10%). Excluding these two countries, global copper cathode production declined by approximately 1.4%. Chile's copper cathode production fell by 11.7%, with copper cathode (from concentrates) production declining by 24% due to smelter operational constraints and maintenance, and electrodeposition copper production declining by 5.7%. Production in Asia (excluding China) is estimated to have declined by 4%, mainly due to production decreases in Japan, Indonesia, and the Philippines. India's production is estimated to have grown by 25%, benefiting from improved capacity utilization rates and the capacity ramp-up of the Adani smelter. Global secondary refined copper production (from scrap) increased by 7.6%, mainly driven by growth in China. Preliminary data indicated that global apparent refined copper usage grew by 0.8% in Q1 2026. Although global usage excluding China was estimated to have grown by 1.7%, China's apparent demand (excluding bonded warehouse/unreported inventory changes) was estimated to be basically flat, affected by a 40% decline in China's net imports of copper cathode. China currently accounts for approximately 58% of total global refined copper usage. The preliminary global refined copper supply-demand balance indicated an oversupply of 396,000 mt in Q1 2026. In compiling the global market balance, ICSG used China's apparent demand calculation method, which does not account for changes in unreported inventories. However, to facilitate global market analysis, an adjustment item has been added to the attached tables — "Global refined copper balance adjusted for Chinese bonded warehouse inventory changes" — which adjusts the global refined copper balance based on the average bonded warehouse inventory change estimates from two Chinese copper market consultancies. In Q1 2026, the global refined copper balance based on China's apparent usage (excluding bonded warehouse/unreported inventory changes) showed a preliminary oversupply of approximately 396,000 mt, compared with an oversupply of approximately 135,000 mt in the same period of 2025. The global refined copper balance adjusted for estimated changes in Chinese bonded warehouse inventories showed a market oversupply of approximately 386,000 mt. Copper Prices and Inventories: Based on the average estimates from two independent consultancies, Chinese bonded warehouse inventories were estimated to have decreased by approximately 10,000 mt from the end of 2025 levels during the first three months of 2026. As of the end of April 2026, copper inventories at major metal exchanges (LME, COMEX, SHFE) totaled 1,148,760 mt, the highest level since January 2003. Inventories increased by 404,648 mt, or 55%, from the end of December 2025, with LME up 253,350 mt, Shanghai Futures Exchange up 46,683 mt, and COMEX up 104,615 mt. The LME spot copper average price in April was $12,891.38 per mt, up 3% from the March average price of $12,498.98 per mt. The 2026 copper price high and low were $14,097 per mt (May 13) and $11,826 per mt (March 19), respectively, with a year-to-date average price of $12,947.22 per mt, up 30% from the 2025 average price. Global Refined Copper Supply and Demand Trends Notes: 1/ Refers to apparent usage 2/ Refined copper balance = production - usage 3/ Seasonally adjusted balance data 4/ Global refined copper balance adjusted for estimated changes in Chinese bonded warehouse inventories (Wenhua Composite)

【SMM Analysis: Enterprises Actively Expanding Outside China Combined with Demand Boost Led to Significant MoM Increase in Copper Wire Rod Exports in April】Total exports of copper wire rod (HS codes 74081100 and 74081900) increased MoM in April, showing growth both YoY and MoM. The specific data are as follows: ...

[Latest Data from the General Administration of Customs] In April 2026, China's copper wire rod exports totaled 30,500 mt, up 19.24% MoM and up 112.27% YoY. Exports of refined copper wire with a maximum cross-sectional dimension >6mm were 16,600 mt, up 21.66% MoM and up 108.2% YoY. Exports of other refined copper wire were 13,900 mt, up 16.47% MoM and up 117.36% YoY. (HS code: 74081100, 74081900)

[SMM Analysis]: Copper-related Policy Shifts Across the Americas: Copper is no longer merely an industrial metal — it is rapidly emerging as a strategic resource. From mining policy reforms in Chile and Peru, to the U.S. Section 232 investigation and the strengthening of North American critical minerals strategies, copper policies across the Americas in 2025–2026 are set to exert profound influence over global copper supply-demand balances, smelting dynamics, and copper price volatility.

The recent sharp rise in copper prices has been accompanied by several headline trading themes: the widening LME-COMEX spread, record-low copper concentrate TC, the energy crisis in Peru, repeated uncertainty around the restart pace at Grasberg, and the substitution effect between refined copper and copper scrap in China. At a deeper level, however, these events can all be understood through one central theme: the global emphasis on copper resource security is continuing to rise, and the market is repricing the entire copper value chain. Since 2025, the US has continued to strengthen the strategic importance of copper. In its Section 232 investigation into copper imports, the US explicitly included copper, copper concentrates, refined copper, copper scrap and related derivative products within the scope of national security review, and required an assessment of how US dependence on copper imports may affect national security and industrial resilience. Subsequent policy discussions also proposed that part of the high-quality copper scrap generated in the US should be prioritized for domestic sales. Against this backdrop, the COMEX premium over LME is no longer merely a simple screen-traded spread. It has become a price signal through which the US market attracts globally deliverable refined copper resources. If the LME-COMEX spread continues to widen and becomes sufficient to cover transportation, financing, warehousing, delivery and policy risks, it may attract some freely tradable material to the US market. Although this round of trading is different from 2025, the market is already pricing in a wider spread. While market rumors continue to circulate, the COMEX premium has already reflected the US market’s ability to attract resources. Whether this will truly translate into changes in physical trade flows still depends on LME inventories in the US, COMEX inventories and the ratio of cancelled warrants. If US LME inventories decline, the cancelled warrant ratio rises, and COMEX inventories increase at the same time, it would suggest that material may be moving from the LME system into the COMEX system. In that case, the decline in deliverable LME resources could create room for the LME nearby backwardation structure to strengthen. Once LME shifts from contango into backwardation, the impact will further transmit into the LME-SHFE structure. A stronger LME nearby structure would compress China’s import arbitrage ratio and could even reverse the LME-SHFE spread, passively opening China’s export window. On the one hand, a stronger LME structure would raise smelters’ raw material costs and offshore procurement costs. On the other hand, if China’s domestic import ratio remains weak, exports may be forced to recover in order to repair regional price spreads. Under extreme market conditions, it will be necessary to closely monitor LME time spreads, especially the TOM-NEXT spread. If TOM-NEXT strengthens rapidly, it usually indicates that pressure on nearby deliverable resources is rising, and the market may shift from normal spread trading to pricing the risk of a squeeze. For China, the core logic is to secure raw material supply. Copper concentrate TC has fallen to around -$107 to -$103/mt , indicating that miners still hold strong bargaining power and that smelters’ raw material procurement pressure continues to rise. In the short term, high sulphuric acid prices can still partly offset smelters’ margin losses. However, against the backdrop of China restricting or banning some sulphuric acid exports after May, further upside room for domestic acid prices may be limited. If sulphuric acid prices fall while TC remains deeply negative, smelters’ profit structure will become even more distorted. If this is further combined with a weakening LME-SHFE structure and a deterioration in the import arbitrage ratio, smelters will simultaneously face rising raw material costs, processing fee losses and declining by-product revenue. Another key domestic signal is copper scrap. At present, although China’s refined copper social inventory continues to decline under the weakening substitution effect between refined copper and scrap, the sharp increase in copper scrap inventories is also a reality. Affected by reverse invoicing and the fair competition review regulations, tax costs for copper scrap processors have increased. Scrap with invoices has become scarce and is flowing more toward smelters, reducing the actual amount of scrap available to processors and thereby supporting refined copper consumption. However, this support is not without limits. If copper prices continue to rise, the refined copper-scrap spread widens again, and scrap inventory pressure continues to build, the incentive for scrap to substitute refined copper will strengthen. At that point, refined copper demand may decline sharply under the combined effect of high copper prices suppressing consumption and the recovery of scrap substitution, while China’s destocking pace may slow or even reverse into inventory accumulation. The recent market discussions around Peru’s energy crisis and the delayed recovery pace at Grasberg are more emotional triggers under the broader resource security theme, rather than decisive variables that have already changed the current refined copper balance — in other words, they are more of an excuse for the market. The energy issue in Peru has raised market attention to the stability of energy supply for South American mines. As for Grasberg, Freeport Indonesia previously mentioned that full recovery could be delayed until 2028, but Freeport-McMoRan later stated that it still maintained its plan to restore full production by the end of 2027, showing that there is still a gap between market expectations and the actual impact. These events have not caused severe damage to the global physical refined copper balance in the short term. However, against the backdrop of deeply negative TC, China-US resource competition and widening cross-market spreads, any uncertainty at the mine end will be amplified by the market into a supply security premium. Looking ahead, four groups of indicators deserve close attention. First, the LME-COMEX spread, US LME inventories, COMEX inventories and the cancelled warrant ratio. If the spread widens together with a visible transfer of material from LME to COMEX, there is still upside room for LME nearby backwardation. If US inventories remain high, the spread is more likely to stay at the level of policy and financial pricing. Second, LME time spreads, especially Cash/3M and TOM-NEXT. If TOM-NEXT strengthens abnormally, the market should watch for nearby structure risk. Third, China’s refined copper-scrap spread and copper scrap inventories. If the refined copper-scrap spread widens and scrap flows recover, the support to refined copper consumption will weaken. Fourth, TC, sulphuric acid prices and the LME-SHFE ratio. If TC continues to deteriorate, acid prices fall and the ratio weakens, smelters’ operating pressure will rise significantly. Overall, amid the repricing of copper under resource security competition, a price transmission relationship has emerged across COMEX, LME and SHFE, which is the direct driver behind the recent copper price rally. Under the influence of these indicators, capital flows and physical trade flows may be reshaped again. In this environment, securing supply chain stability and cost safety remains a long and difficult process.

Copper Cross-Market Spread: Since entering May, the LME/COMEX copper spread has continued to widen. According to SMM data, the highest spread between the LME and COMEX nearby copper contracts expanded from US$108.61/mt on April 30 to US$378.5/mt on May 13, marking a notable widening within the month. Based on current spot trade feedback, no significant change has yet been observed in refined copper trade flows. At present, China’s imported copper arrivals and transactions are still mainly influenced by factors such as the import arbitrage ratio, domestic spot demand, and the execution of overseas long-term contracts.