Copper futures showed mixed signals on July 30, with the main Shanghai Futures Exchange (SHFE) contract opening at 104,500 yuan per tonne and closing at 104,690 yuan per tonne, down 0.19% from the previous day. However, during overnight trading, the contract opened at 105,370 yuan per tonne and closed at 105,560 yuan per tonne, a 0.75% increase from the afternoon close.
According to SMM data, spot copper premiums for the 2608 contract stood at 220-310 yuan per tonne, with an average of 265 yuan per tonne, down 15 yuan per tonne from the previous session. The SHFE 2608 contract jumped higher before pulling back, opening at 105,000 yuan per tonne, hitting a session high of 105,440 yuan per tonne, and closing at 105,040 yuan per tonne. The monthly spread ranged from 130 to 200 yuan per tonne, while import losses were between 460 and 540 yuan per tonne. Trading sentiment weakened as sellers lowered quotes twice during the session. High-grade copper remained scarce, while lower-grade non-registered copper saw moderate trading volumes. As month-end approached, downstream buyers only purchased on a need-to-basis, with most bids coming in below premiums of 200 yuan per tonne, creating a noticeable bid-ask spread. While inventory levels in East China saw a slight decline, providing some support for premiums, the reduction was limited and far-month supply remained ample. Spot premiums are expected to persist today, with quotes likely to edge slightly lower.
Geopolitical and Economic Factors
Geopolitical tensions escalated after the U.S. Central Command announced a large-scale strike on Iran on July 29, in response to an attempted attack on U.S. forces in the Middle East the previous day. Iran's Islamic Revolutionary Guard Corps retaliated on July 30 by attacking U.S. military bases in Kuwait and Jordan. On the economic front, U.S. Q2 GDP growth slowed to 1.5% annualized, below the 2.1% recorded in Q1 and market expectations. Consumer spending and investment remained robust, but net exports dragged down the overall figure. The U.S. core PCE price index rose 0.1% month-over-month in June, with a year-over-year increase of 3.3%, down from May. The overall PCE price index fell 0.1% month-over-month in June, marking the first negative reading since the onset of the pandemic in 2020.
Mining and Supply Developments
Canada's First Quantum Minerals is accelerating preparations to restart the Cobre Panama copper mine, beginning early processing of stockpiled ore and adding approximately 1,000 new jobs. The company said formal negotiations with the Panamanian government regarding the mine's future operations are imminent. Direct employment at the mine has expanded from 2,350 workers in early April to 3,000 by the end of June to support commissioning, maintenance, and operations. In May, the company activated the first of three grinding circuits, producing 3,216 tonnes of copper concentrate from stockpiled ore during the quarter, processing about 2.1 million tonnes of ore. The mine's stockpiled ore is estimated at approximately 38 million tonnes, with recoverable copper of about 70,000 tonnes, sufficient to sustain processing at current rates for around 12 months. The company maintains its 2026 production guidance for the stockpile at 30,000 to 40,000 tonnes of copper. CEO Tristan Pascall expressed encouragement over the quarter's progress, particularly the release of the final audit report and the establishment of a cross-ministerial committee, while the company remains prepared for constructive engagement with the Panamanian government to reach a fair and lasting solution.
Recycled Copper and Consumption
In the recycled copper sector, rising copper prices have made high-purity scrap copper highly sought after, with quality materials being snapped up immediately upon arrival by downstream buyers. As traditional primary copper smelting capacity growth faces constraints and downstream demand rises, the market for recycled copper is expanding, creating new opportunities for China's scrap copper market. Additionally, Chinese recycled copper products are gaining traction overseas due to their low carbon emissions, low energy consumption, stable quality, and traceable carbon footprint.
In consumption news, Chujiang New Materials' Guangdong subsidiary, Qingyuan Chujiang High-Precision Copper Strip Co., Ltd., has officially begun construction on a 90,000-tonne-per-year high-precision copper strip and foil project. This is the third-phase expansion of Qingyuan Chujiang, with a total investment of 12.2 billion yuan and a planned completion date by the end of 2027. The project will build new casting, precision rolling, raw material production workshops, and supporting environmental and substation facilities, using an industry-leading integrated intelligent process of "casting, hot rolling, welding, and cold rolling," focusing on producing high-end copper strip and foil products.
Inventory and Market Outlook
LME copper inventories fell by 6,900 tonnes to 255,400 tonnes, while SHFE inventories decreased by 424 tonnes to 25,737 tonnes. For the week ending July 26, domestic electrolytic copper inventories stood at 111,900 tonnes, down 800 tonnes from the previous week. The market is currently characterized by macro pressure and weakening industrial support. The U.S.-Iran conflict and the implementation of U.S. tariffs have pushed up the dollar and bond yields, causing industrial metals to pull back from highs, with copper prices turning weaker. The domestic supply chain has entered a seasonal downturn. While tight copper concentrate supply and deeply negative treatment charges (TC) provide a floor for copper prices, domestic refined copper is shifting from destocking to restocking. Import losses have closed the import window, and spot premiums continue to fall. Scrap copper trading is limited to arbitrage opportunities, with weak physical demand. Copper rod producers are generally cutting output, while demand from the wire, cable, home appliance, and hardware sectors is shrinking. The market is gradually pricing in expectations of a looser supply-demand balance. Tight macro liquidity is capping price upside, while low inventories and constrained mine supply limit downside risks, leaving the market in a wide range-bound, weak pattern. Geopolitical risks in the Middle East persist, the dollar remains strong, and domestic demand is unlikely to improve during the off-season. Concentrated arrivals of imported copper will further ease spot tightness. The recommended strategy is to trade within a range, with limited opportunities for directional trends. The likelihood of a sharp decline is relatively low, as the Federal Reserve kept rates steady in July. Copper prices are expected to fluctuate between 102,800 yuan per tonne and 106,500 yuan per tonne. Arbitrage: Pause. Options: Sell puts.
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