Copper futures experienced a slight decline on July 7th, with overall market sentiment appearing lackluster.
In today's copper futures market, the main Shanghai copper contract for August 2024 opened higher before retreating, showing weakness in the afternoon session. The contract, coded 2608, opened at 102,630 yuan per tonne, reached a high of 103,270 yuan, and a low of 102,600 yuan. It settled at 102,970 yuan, down 110 yuan or 0.11% from the previous settlement of 103,080 yuan. The total volume for the 2608 contract was 58,519 lots, a decrease of 2,067 lots, while open interest fell by 3,106 lots to 148,515 lots. In the Asian session, London Metal Exchange copper prices also trended lower. At 15:05 Beijing time, the latest quote was $13,364 per tonne, down $47 or 0.35%.
Spot copper prices in China also saw minor declines. The Yangtze spot price for Grade 1# copper was quoted at 103,360 yuan per tonne, down 60 yuan, with a premium of 160-200 yuan, up 10 yuan. The Yangtze composite price for Grade 1# copper was at 103,285 yuan per tonne, down 55 yuan, with a premium of 50-160 yuan, up 15 yuan. In Guangdong, the spot price for Grade 1# copper was 103,230 yuan per tonne, down 60 yuan, with a discount of 50 yuan to a premium of 150 yuan, up 10 yuan. The Shanghai region price for Grade 1# copper was 103,260 yuan per tonne, down 50 yuan, with a premium of 40-120 yuan, up 20 yuan.
Market Analysis
On the macroeconomic front, the interplay between geopolitical risks and macro expectations has intensified. An attack on an LNG carrier in the Strait of Hormuz and Iran's firm stance have heightened market concerns over shipping lane security, boosting safe-haven demand and pushing the US dollar index back near a high of 101 points, which is exerting short-term pressure on copper prices. However, the US June non-farm payrolls data came in significantly below expectations, causing market expectations for Federal Reserve rate hikes this year to plummet to "zero to one," which has limited the dollar's upside. Additionally, the previously anticipated US tariff policy on refined copper has not materialized, leaving many traders in a wait-and-see mode.
Domestically, the latest official data shows that shipments of AI-enabled smartphones, computers, and other smart devices continue to grow at a rapid pace. The "Artificial Intelligence Plus" initiative is driving the vigorous development of new products and business models, injecting fresh momentum into related industrial chains.
The industry fundamentals present a picture of "tight ore supply, increased ingot output" and "diverging demand." On the supply side, the global shortage of copper concentrate remains entrenched. In Peru, vigilance is required for potential logistics disruptions due to El Niño effects. In Chile, Antofagasta has finalized mid-year long-term agreements with domestic smelters, while spot treatment charges (TCs) remain deeply negative in the -$127 per dry metric tonne range, indicating smelters have ceded pricing power back to the miners. Coupled with supply disruptions in Indonesia and the Democratic Republic of Congo, raw material shortages are unlikely to ease in the short term. According to the latest market information, following Russia's lead, Kazakhstan has also completely suspended sulfur exports, further strengthening expectations for a tightening supply of SX-EW copper. High sulfuric acid prices are supporting high operating rates for pyrometallurgical copper, with July's refined copper output expected to increase month-on-month. However, some high-cost SX-EW production capacity is approaching breakeven levels. On the demand side, July is a traditional off-season, compounded by high temperatures and rain, leading to weak demand from the real estate and traditional home appliance sectors. However, AI computing infrastructure, ultra-high voltage power transmission, and the expansion of new energy vehicles are providing copper with strong structural resilience. Copper usage in pure electric vehicles and 800V high-voltage platforms has doubled, and the combined effect of the "vehicle + charging pile + energy storage" triple engine is effectively offsetting downward pressure from traditional sectors. On the inventory front, copper stocks both domestically and internationally continue to be drawn down. Inventories on the Shanghai Futures Exchange and the LME have both fallen to new lows for the year and the lowest in three and a half months, providing solid bottom-end support for copper prices.
Spot market circulation is tight, with arrivals at social warehouses noticeably contracting. While holders are willing to sell, downstream purchasing enthusiasm is not high, with transactions mostly concentrated around low-priced, essential needs. The overall trading atmosphere remains subdued.
Overall Outlook
In summary, despite some macroeconomic pressure, the tight supply situation remains unchanged, and the ongoing inventory drawdown provides strong support for copper prices, with solid bottom support evident around 100,000 yuan per tonne. After testing the high of 103,350 yuan per tonne, Shanghai copper faced resistance and pulled back. Short-term downside appears limited, and the market is likely to maintain a high-level sideways consolidation pattern.
The expected trading range for the main Shanghai copper contract 2608 tomorrow is projected to be between 102,000 and 103,800 yuan per tonne.
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