Huatai Futures has published its analysis on the copper market, noting a firming price trend amidst tightening physical supply as the futures contract approaches its delivery date.
Market News and Key Data
Futures Market Performance:
On July 14, 2026, the most active Shanghai copper futures contract opened at 103,910 yuan per tonne and closed at 104,390 yuan per tonne, marking a gain of 1.25% from the previous trading day's close. During the overnight session, the same contract opened at 104,700 yuan and settled at 104,540 yuan, representing a 0.28% increase from the afternoon session's close.
Spot Market Conditions
According to SMM data, spot SMM Grade 1 electrolytic copper was quoted at a premium of 100 to 210 yuan per tonne over the July 2026 futures contract, with an average premium of 155 yuan, a daily decrease of 60 yuan. Despite the drop, premiums remain at elevated levels for the year. In the morning session, the July 2026 contract traded within a narrow range of 103,950 to 104,280 yuan before closing at 104,310 yuan. The backwardation between the nearby contracts ranged from 180 to 340 yuan, while import arbitrage profits stood between 510 and 780 yuan for the current month. Spot trading in Shanghai showed a divergence: selling sentiment improved slightly while purchasing weakened. After opening high, spot premiums for various brands declined throughout the session, with trading turning quiet later. Some merchants sold off goods at lower prices, and non-standard copper traded at a discount. Today marks the last trading day for the July 2026 contract, which holds an open interest of 4,500 lots. Warehouse receipts on the Shanghai Futures Exchange total 47,158 tonnes, sufficient to meet delivery requirements. The immediate physical supply is tight. Expectations for favorable forward contract roll premiums, combined with the support from the backwardation structure, suggest the spot market is likely to maintain a premium pricing pattern.
Key Information Summary
Economic Data: The U.S. Bureau of Labor Statistics released the June Consumer Price Index (CPI) data, showing a month-on-month decline of 0.4%. This figure was significantly lower than the market expectation of -0.1% and marked the first monthly contraction since the early stages of the pandemic in 2020. On a year-on-year basis, the CPI inflation rate fell sharply to 3.5% from 4.2% in May. Federal Reserve Chair Wash stated that the central bank's current primary task is to restore price stability and ensure the high inflation of the past five years becomes a thing of the past. He noted the U.S. economy remains resilient, with strong growth in business investment, particularly in AI-related infrastructure, and an overall stable labor market. However, the Fed needs to assess the impact of new technologies like AI on productivity, employment, and inflation.
Mining Sector: Customs data shows China imported 2.335 million tonnes of copper ore and concentrates in June 2026, down 1% from 2.3607 million tonnes in May and 0.6% lower than the 2.35 million tonnes imported in June 2025. Cumulative imports for the first half of the year reached 14.609 million tonnes, a year-on-year decrease of 0.9%. In other news, Australian polymetallic miner Legacy Mines announced on Monday, July 13, that it will invest approximately A$100 million (about US$69.27 million) to restart operations at the Mungana mine and its associated regional processing center in northern Queensland. The project aims to establish a central processing hub serving numerous satellite deposits within a 160-kilometer radius. The mine produces gold, copper, and zinc. Legacy Mines expects the project to directly create over 200 jobs and indirectly support more than 500 others, with a mine life of at least 50 years. Driven by high commodity prices, the company plans to increase gold and silver production within three years.
Smelting and Imports: According to a report from Jiangtong Nanfang's official account, a specialized acceptance expert team, led by the group's deputy chief engineer Wu Xinming, recently conducted a comprehensive final acceptance inspection for the 100,000 tonnes per year cathode copper expansion project at the Qingyuan Jiangtong electrolysis workshop. After on-site verification, document review, and comprehensive evaluation, the expert team unanimously agreed the project met acceptance standards. During construction, the project team overcame multiple challenges including pandemic controls, major floods, and multi-disciplinary交叉 construction, completing the build 23 days ahead of schedule and achieving a smooth, one-time start-up. Upon completion, Qingyuan Jiangtong's annual cathode copper capacity has exceeded 200,000 tonnes, with supporting production capacities of 1,200 tonnes of anode slime and over 2,000 tonnes of nickel sulfate. This is expected to boost the company's annual output value beyond 10 billion yuan, making it the first non-ferrous metals enterprise in Qingyuan City to reach this milestone.
Consumption: A Mysteel survey of 63 domestic refined copper rod sample enterprises, with a total involved capacity of 16.49 million tonnes, showed domestic refined copper rod output in May 2026 was 914,000 tonnes, a month-on-month increase of 2.74%. The capacity utilization rate for refined copper rod in June was 67.44%, up 3.92% month-on-month and 5.12% year-on-year. Both output and capacity utilization saw a sequential recovery in June. As copper prices trended lower during the month and some wire and cable enterprises reported relatively sufficient orders, downstream wire and cable companies showed stronger willingness to replenish stocks on price dips. Additionally, due to narrowing price differentials, some orders shifted from the recycled copper rod segment to the refined copper rod segment, improving order books for refined copper rod producers. However, overall, refined copper rod enterprises in June still faced challenges from high raw material procurement costs and significant finished product inventory pressure. Consequently, production enthusiasm was not fully unleashed, with some companies choosing to control output to alleviate inventory pressure. Based on surveyed production plans, the sample is expected to produce 903,800 tonnes of refined copper rod in July, down 1.12% month-on-month. The estimated capacity utilization rate for July is 64.53%, a decrease of 2.9% from June but an increase of 3.21% year-on-year.
Inventory and Warehouse Receipts
LME warehouse stocks changed by -1,675 tonnes to 303,525 tonnes compared to the previous trading day. SHFE warehouse receipts changed by -2,461 tonnes to 44,697 tonnes. As of July 13, domestic market electrolytic copper spot inventory stood at 140,000 tonnes, a decrease of 25,000 tonnes from the previous week.
Trading Strategy
Copper: Cautiously Bullish
The current market presents a divergent landscape of macro disturbances, strong fundamental support, and weak terminal demand. Overseas factors, including Middle East geopolitical tensions and fluctuating hawkish expectations from the Fed, continue to disturb global liquidity, with volatility in the US dollar and oil prices amplifying commodity price swings. Domestically, continuously declining electrolytic copper inventories, the periodic opening of the import arbitrage window, and rising Yangshan copper premiums, combined with deeply negative Treatment Charges (TC) at the mining end and smelter maintenance, are collectively tightening supply. Scrap copper supply is constrained by policy, leading to raw material shortages and providing strong support for the spot market. However, traditional terminal consumption remains sluggish during the high-temperature off-season, pressuring operating rates at copper fabricators. Only the new energy sector and overseas exports provide slight support. This creates a market博弈 of tight supply versus weak demand. Overall, short-term copper prices have solid bottom support, but their upside is limited by weak downstream demand, leading to an overall pattern of high-level consolidation. The expected trading range is between 102,600 yuan and 105,800 yuan per tonne.
Arbitrage: Hold Off
Options: Sell Puts
Key Risks
Domestic demand declining too rapidly, leading to significant inventory accumulation.
Risk of a liquidity crunch in overseas markets.
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