The Shanghai Futures Exchange (SHFE) copper futures for the main contract opened at 105,460 yuan per tonne and closed at 106,120 yuan per tonne on August 3, 2026, up 0.63% from the previous trading day. During night trading, the main contract opened at 105,750 yuan per tonne and closed at 106,190 yuan per tonne, rising 0.47% from the afternoon close.
According to SMM data, spot cathode copper in the Shanghai market traded at a premium of 230-330 yuan per tonne over the SHFE 2608 contract, with an average premium of 280 yuan per tonne, up 20 yuan per tonne from the prior day. The SHFE 2608 contract opened higher in morning trading, following a W-shaped pattern, before settling at 105,830 yuan per tonne. The monthly back contango ranged from 130-220 yuan per tonne, while import losses for the current month stood at 440-540 yuan per tonne. Sentiment in the Shanghai spot market improved in tandem with buying activity, with holders initially offering at high prices before consistently lowering quotes. Transaction premiums for registered copper gradually declined, while premiums for unregistered copper were only 80-160 yuan per tonne. On the inventory front, Shanghai stocks rose to 77,000 tonnes, driven by inflows of unregistered copper arrivals, while Jiangsu inventories fell slightly, reflecting resilient end-user demand. Early-month restocking by downstream buyers supported spot premiums, but rising Shanghai inventories and increased supply of lower-grade, non-standard copper capped copper price gains. Spot premiums are expected to remain volatile today, with limited room for further upside.
On the geopolitical front, U.S. President Donald Trump stated that negotiations with Iran are currently underway, noting that the first phase involves reopening the Strait of Hormuz, with denuclearization as the second phase. The strait could reopen as early as August 4. Trump added that the talks were initiated at Iran's request and supported by Saudi Arabia, the UAE, Qatar, and other nations. In economic data, the U.S. ISM Manufacturing PMI for July surged to 55.6, the highest level since May 2022, marking seven consecutive months of expansion. Key indicators including production, new orders, and employment all strengthened. However, the U.S. S&P Global Manufacturing PMI for July came in at 53.9, a three-month low. Additionally, New York Fed President John Williams, the central bank's third-ranking official, stated that current monetary policy is "in a good place," with inflation expected to ease in the second half of the year, and the Fed sees no need to rush into adjusting interest rates. However, if the economic outlook deviates from expectations and inflation fails to return to the 2% target as projected, the Fed "absolutely must take action."
In mining news, Orion Minerals announced on July 31 that it has made substantial progress on conditions precedent related to a $250 million prepayment financing and offtake agreement with Glencore, with the first tranche expected to be available by the end of August. The company said the South African Reserve Bank has approved the relevant matters, and creditor agreements with Glencore and Triple Flag Precious Metals are in final stages. The offtake agreement with Glencore is also finalized and pending signature. Orion Managing Director and CEO Tony Lennox expressed satisfaction with the near-completion of conditions precedent for Tranche A, which will enable the start of construction of the upper section of the Prieska copper-zinc mine, a major milestone in the company's development. Under the current timeline, production is expected 13 months after financial close. In February, Orion signed a $250 million prepayment financing and offtake agreement with Glencore, with funds released in two tranches: an initial $40 million for the upper section construction and development, and $210 million for the deeper section. Repayment is tied to spot deliveries of copper and zinc concentrate from the mine.
Additionally, Brazilian mining giant Vale SA reported its Q2 2026 financial results on July 30, with net profit of $1.38 billion, down 35% year-over-year and below the LSEG analyst consensus of $1.85 billion, weighed down by derivatives and tax-related financial impacts. Vale raised its full-year copper production guidance for 2026, adjusting the range to 360,000-380,000 tonnes, with the lower end of the range increased by 10,000 tonnes.
In smelting and import data, the Shanghai Futures Exchange reported that SHFE copper inventories continued to decline for the week ending July 31, falling 0.4% to 69,334 tonnes, the lowest in over two years. Demand was mainly for essential restocking during the copper consumption off-season, with the destocking pace slowing markedly. International copper inventories fell by 24 tonnes to 16,332 tonnes. London Metal Exchange (LME) copper stocks continued to decline, with the latest inventory level at 249,850 tonnes, a five-month low. Meanwhile, COMEX copper inventories continued to rise, reaching 716,175 short tons, a record high. Global copper inventories exhibit an extreme regional divergence. SHFE copper inventories declined by 66,398 tonnes in July, down nearly 49% month-over-month, and have fallen 84% from the mid-March high of 433,458 tonnes. LME copper inventories dropped by 79,375 tonnes in July, down 24.11% month-over-month, as large volumes were marked for delivery, with canceled warrants rising. In contrast, COMEX copper inventories accumulated nearly 50,000 tonnes during the month, hitting a new all-time high.
In consumption, July saw the entire downstream sector enter the traditional off-season, with orders for power cables, home appliances, and electric motors declining simultaneously. Demand for real estate-related cables remained weak, with only grid infrastructure providing essential support. Enameled wire production for home appliances and industrial motors shrank, as downstream buyers remained cautious at high copper prices, only making sporadic restocking during minor price dips. Copper demand from new energy sources showed structural resilience but was insufficient to offset weakness in traditional sectors. Downstream firms generally controlled raw material inventory, with stocks at low levels and finished goods inventories high. The off-season continues into August, with home appliance and air conditioner production schedules declining further, no signs of recovery in real estate-related copper demand, and grid infrastructure spending remaining stable. High copper prices continue to suppress bulk purchasing downstream, with end-users only fulfilling monthly contract obligations and spot transactions sluggish. Pre-September peak season restocking expectations have not yet materialized, and overall consumption improvement remains limited. Only new energy, energy storage, and AI electrification segments show modest incremental demand, which is insufficient to reverse the overall weak terminal market.
In inventory and warehouse data, LME warrants changed by -5,825 tonnes to 244,025 tonnes. SHFE warrants changed by -425 tonnes to 25,138 tonnes. As of August 3, domestic market electrolytic copper inventory stood at 118,900 tonnes, a change of 7,000 tonnes from the previous week.
Strategy for copper: Cautiously bullish. For hedging clients: Smelters should implement short hedges at the pressure range of 106,800-107,630 yuan per tonne, with a hedge ratio of 60%-80%, combined with put options to hedge downside risk. Importers should reduce forward purchases and look for arbitrage opportunities in the SHFE/LME ratio. Downstream cable and copper rod buyers should only implement long hedges in the support range of 103,470-104,410 yuan per tonne, covering only short-term essential needs. Secondary copper producers should maintain small, two-way hedges on both raw materials and finished products, adjusting positions dynamically based on arrivals and inventory levels, to strictly manage spot-futures exposure. For speculative clients: Copper is expected to trade in a volatile and slightly weak range in August, oscillating between 103,020 and 107,600 yuan per tonne. Trade within the range, taking light long positions at support and short positions at resistance, with strict stop-loss orders. During periods of macro data releases or geopolitical conflicts, reduce position sizes to control risk. Keep per-trade losses within 2% of total capital, avoid adding to losing positions, and exit immediately upon a breakout. Focus on trading the nearest month's main contract to avoid liquidity risks in deferred months. Options: Sell put options. Risks: Weak demand, liquidity risk, and stampede risk.
Investment consulting business qualification: Securities Regulatory Commission Permit [2011] No. 1289
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