[SMM Analysis: The "Counter-Cyclical" Logic of Copper Smelting: When Sulfuric Acid Becomes the Main Product]

Today, the most-traded BC copper 2604 contract opened at 89,640 yuan/mt and hit a high of 89,640 yuan/mt early in the session, then saw wide swings. After the daytime session opened, the center of copper prices slid straight down and dipped to 88,550 yuan/mt near the close, finally settling at 88,740 yuan/mt, down 0.68%. Open interest rose to 5,792 lots, up 119 lots from the previous trading day, and trading volume increased to 3,285 lots, indicating that bears added positions. From a macro perspective, the fallout from an attack on an oil tanker in the Gulf region continued to unfold, and Iran stated it might keep the Strait of Hormuz closed, sending crude oil prices higher. Safe-haven sentiment boosted the US dollar index, while the market also lowered expectations for US Fed interest rate cuts this year to 20 basis points; together, these factors weighed on copper prices. Fundamentals, supply side, structural divergence: inventory at high levels but warrants declined, and under delivery-driven logic, overall supply remained relatively loose. Supply was ample; demand side, downstream demand was gradually released. The SHFE copper 2604 contract closed at 100,310 yuan/mt. Based on the BC copper 2604 contract at 88,740 yuan/mt, its after-tax price was 100,276 yuan/mt. The price spread between the SHFE copper 2603 contract and BC copper was 34, and the spread reverted to a contango structure.

[SMM SHFE Copper Flash News] According to the SHFE warrant daily report, copper futures warrants decreased by 11,264 mt during the day, the largest daily decline so far in 2026. Among them, Shanghai fell by 4,750 mt, breaking the previous trend of लगातार increases; Guangdong fell by 447 mt; Jiangsu fell by 5,867 mt; and Zhejiang fell by 200 mt. As copper prices declined during the week, downstream restocking demand emerged, copper cathode social inventories had already begun a slight destocking, and Shanghai spot copper also shifted from discounts to premiums.

[SMM Copper Express] The correction in copper prices drove enterprises to restock for rigid demand, but enterprises maintained ongoing production scheduling, so days of raw material inventories at major wire and cable enterprises in China fell 0.31 days MoM this week; as for finished product inventories, the correction in copper prices boosted downstream consumption, but when copper prices remained in a high range, they still suppressed end-user purchase willingness, and days of finished product inventories at major wire and cable enterprises in China fell 0.41 days MoM this week.

[SMM Copper Express] This week, the operating rate of SMM copper wire and cable enterprises was 66.59, up 5.69 percentage points MoM. The operating rate steadily rebounded this week, mainly due to a slight correction in copper prices that drove order release, coupled with support from concentrated power grid deliveries, though the current pace of order recovery was still weaker than in the same period last year. SMM expects the operating rate of copper wire and cable enterprises next week to increase by 3.45 percentage points MoM to 70.04, down 4.49 percentage points YoY.

【SMM Copper Cathode Rod Flash News】This week, the operating rate of the copper cathode rod enterprise industry increased by 10.45 percentage points WoW. The pullback in copper prices drove a surge in orders, enterprises accelerated their production pace, and operating rates at downstream wire and cable and enamelled wire producers rebounded steadily. Enterprises were expected to continue raising output and restocking next week, while downstream orders were expected to remain stable. SMM expected the operating rate to increase by 6.27 percentage points WoW to 79.19%.

Spot #1 copper cathode in North China was quoted at parity to a premium of 80 yuan/mt against the front-month contract today, with the average premium unchanged from the previous trading day at 40 yuan/mt, and the average transaction price down 155 yuan/mt from the previous trading day to 100,470 yuan/mt.

[SMM Shanghai Spot Copper] Looking ahead to next week, next Monday will be the last trading day of the SHFE copper 2603 contract. According to the SMM #1 copper cathode price assessment methodology, SMM always quotes against the front-month contract. The contango price spread between futures contracts narrowed slightly, and suppliers’ willingness to ship to delivery warehouses weakened somewhat, marginally loosening support for spot premiums. Meanwhile, import losses have narrowed substantially, and there are signs that the import window is about to open. If the window opens, it will bring in cargo from outside China, increasing pressure on spot supply in China and creating potential downward pressure on premiums. On the demand side, downstream enterprises maintained just-in-time procurement, providing some support for prices, but intraday, some downstream enterprises were seen to have limited acceptance of spot cargo with high premiums, with procurement turning more cautious. On the supply side, domestic copper and previously price-locked imported cargo continued to arrive, while social inventory remained high. As SMM always quotes against the front-month contract, the shift in the price spread between futures contracts is expected to result in high premiums against the front-month contract, though this is expected to be corrected on the second trading day. Overall, under the dominance of delivery logic, Shanghai spot copper premiums are expected to remain at elevated levels next Monday.

An employee was killed in an accident at Rio Tinto's Kennecott copper mine in Utah, USA, on Thursday. Operations at the mine have been suspended following the incident, and CEO Simon Trott said he would travel to the site. The Kennecott mine produced 125,000 metric tons of copper concentrate in 2025.

SMM Morning Meeting Summary: Overnight, LME copper opened at $13,044/mt. It touched a high of $13,063.5/mt in early trading, then the center moved lower to a low of $12,929/mt, and finally closed at $12,948.5/mt, down 0.77%. Trading volume came in at 17,000 lots, down 235 lots from the previous trading day; open interest stood at 304,000 lots, up 279 lots from the previous trading day, mainly reflecting an increase in bears' positions overall. Overnight, the most-traded SHFE copper 2604 contract opened at 101,240 yuan/mt. It touched a high of 101,240 yuan/mt at the open, then the center moved lower to a low of 100,560 yuan/mt, and finally closed at 100,860 yuan/mt, down 0.15%. Trading volume came in at 26,000 lots, down 62,000 lots from the previous trading day; open interest stood at 189,000 lots, down 3,320 lots from the previous trading day, mainly reflecting a reduction in bulls' positions overall.