Copper prices are showing strength within a range-bound market, influenced by a relatively tight supply of spot material.
Key Market Data and Developments
On June 2, 2026, the most-traded copper contract on the Shanghai Futures Exchange opened at 105,850 yuan per tonne and closed at 106,620 yuan per tonne, marking a gain of 1.85% from the previous trading session's close. In the overnight session, the contract opened at 106,720 yuan and settled at 107,100 yuan, up 1.05% from the afternoon session's close.
Spot Market Conditions
According to SMM data, the June 2026 copper contract experienced an initial surge followed by a pullback and stabilization during the morning session. It opened at 105,620 yuan per tonne, climbed to an intraday high of 106,390 yuan, and closed at 105,860 yuan. Import arbitrage remained unprofitable for the current month, with the Contango spread between months ranging from 160 to 90 yuan per tonne. Trading sentiment in the Shanghai spot market cooled. Premiums for standard-grade copper varied by brand, while high-grade copper commanded stronger premiums due to tight supply. Wet-process copper also saw limited availability and firm quotes. In the afternoon, spot premiums for all brands edged lower and gradually found buyers. Looking ahead, downstream demand remains subdued. However, a widening forward premium is encouraging holders to withhold material for warehouse delivery, tightening low-priced spot resources and supporting the discount structure. An expanding price gap between refined and scrap copper is pressuring premiums for non-standard copper. Spot discounts are expected to persist.
Significant News Summary
Geopolitically, reports from Iran indicate the full opening of the permit application system for vessel passage through the Strait of Hormuz, allowing global shipowners and captains to submit applications. Vessels will receive passage permits upon approval. Iranian media reported that information exchanges with the U.S. have been suspended for several days, contradicting claims from some Western media and officials that talks are proceeding normally. However, former U.S. President Trump stated that dialogue with Iran is ongoing, and U.S. Secretary of State Rubio confirmed negotiations continue, though the timing of an agreement is uncertain. Overall, statements from both sides regarding a peace agreement and strait opening have been relatively moderate, improving market risk sentiment.
On the mining front, ASX-listed Coda Minerals completed a A$6.7 million placement to institutional and professional investors at A$0.13 per share, boosting its cash reserves to A$13 million. The funds will accelerate key pre-feasibility study (PFS) work for the Elizabeth Creek copper-cobalt project, including locked-cycle metallurgical testing, hydrogeological studies, and permitting activities. The company has moved forward multi-stage process testing originally planned for later stages into the PFS phase to systematically address core technical challenges and development risks, enhancing the report's completeness and reliability. CEO Chris Stevens stated the project is at a critical stage of proving technical robustness, commercial viability, and development readiness, with the PFS being a key opportunity to demonstrate its value. The Elizabeth Creek project, located in Australia's Olympic Copper Province, is one of the few advanced-stage copper-cobalt projects in the country.
Regarding smelting and imports, the U.S. White House announced that former President Trump signed an order temporarily adjusting tariffs on certain imported steel, aluminum, and copper products under Section 232 of the Trade Expansion Act of 1962. The order reduces the ad valorem tariff on combines and some other agricultural machinery from 25% to 15%. It also revises the criteria for determining whether imported products are made "wholly" of U.S.-produced steel, aluminum, or copper, lowering the local content threshold from 95% to 85%. These adjusted measures take effect on June 8 but will revert to current tariff rates starting January 1, 2028. Trump initially implemented steel and aluminum import tariffs during his first term. After returning to office in 2025, he adjusted policies from the Biden administration and introduced copper tariffs. On April 2 this year, the White House announced adjustments to ad valorem tariffs on imported steel, aluminum, copper, and related derivative products, effective April 6. Separately, Vedanta Resources' Konkola Copper Mines (KCM) announced a planned 60-day maintenance shutdown at its Nchanga copper smelter for equipment efficiency improvements, supporting its target of 300,000 tonnes annual production by 2030. KCM produced 80,200 tonnes of copper in 2025. Following this, three major Zambian copper smelters—Mopani, Chambishi, and Nchanga—will undergo extended maintenance from June to mid-September: Mopani with a short initial shutdown and a 40-45 day overhaul in August-September, Chambishi shutting for about two months in August, and Nchanga's 60-day cycle. This will concurrently reduce domestic copper smelting and sulfuric acid by-product output. KCM stated it will rely on its own 500-tonne-per-day acid plant and external purchases to secure sulfuric acid supply for its Nchanga tailings leach plant, partially offsetting the raw material shortfall. This concentrated maintenance period may further tighten global copper spot market fundamentals, providing support for prices.
On the consumption side, copper end-user demand was generally weak last week, gradually entering the traditional off-season. Transactions were dominated by rigid demand, with overall activity subdued. The operating rate for the wire and cable sector was 66.1%, declining week-on-week. Stable State Grid orders supported some demand, but construction and real estate-related cable demand remained soft. A pullback in copper prices late in the week spurred a slight uptick in orders. The home appliance sector continued to be sluggish, with supporting demand for products like enameled wire lacking new drivers, leading companies to produce based on immediate needs. The new energy sector showed relative resilience, with stable orders for cables and copper foil maintaining operational rates and offsetting some seasonal pressure. Overall, persistently high copper prices continue to suppress end-user purchasing willingness, with buying interest only briefly picking up during price dips. Market trading activity remains insufficient. Looking to next week, the off-season pattern for end-users is unlikely to break. Demand from wire/cable and home appliances is expected to stay weak, with rigid demand from new energy remaining the primary support. Lower copper prices may prompt some downstream inventory replenishment, but overall consumption is likely to see only a weak recovery without a significant rebound.
Inventory and Warrant Data
LME warrants decreased by 1,800 tonnes to 384,250 tonnes compared to the previous trading day. SHFE warrants fell by 914 tonnes to 98,629 tonnes. On June 2, domestic market physical copper inventory stood at 245,200 tonnes, unchanged from the prior week.
Trading Strategy Outlook
Copper: Cautiously Bullish
Copper prices traded in a high range this week. Macro factors included fluctuating U.S.-Iran geopolitics, Federal Reserve policy uncertainty, and inflation data causing a rebound late in the week. Fundamentally, mining supply remains tight, smelting supply shows marginal improvement, scrap copper circulation is constrained, copper product operating rates are diverging, and end-user demand is seasonally weak, with inventories accumulating slightly. Overall, bullish and bearish factors are interwoven. Copper prices are expected to maintain a high-range oscillation next week, with Shanghai copper between 104,500 and 107,800 yuan per tonne. Trading advice suggests short-term range trading, buying on dips but avoiding chasing rallies. Downstream enterprises with procurement needs should actively execute buy-side hedging operations.
Arbitrage: Pause
Options: Sell Put Options
Key Risks
Domestic demand declining too rapidly, leading to significant inventory accumulation.
Overseas liquidity crunch risk.
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