1. Ceasefire between Iraq and Israel, Weakening US Dollar Index Support Copper Prices; Powell's Hawkish Remarks Trigger Inflation Concerns 

LME copper opened at $9,752.5/mt, with the intraday high reaching $9,759/mt and the low touching $9,649/mt, eventually closing at $9,664/mt, down 0.31%. The overall trend first surged and then pulled back, showing a fluctuating downward pattern. Trading volume was 21,098 lots, and open interest was 284,256 lots. Overnight, SHFE copper 2508 opened at 78,330 yuan/mt, with the intraday high reaching 78,390 yuan/mt and the low touching 78,130 yuan/mt, eventually closing at 78,300 yuan/mt, up 0.04%. The overall trend first declined and then rebounded with fluctuations. Trading volume was 24,597 lots, and open interest was 156,385 lots. On the macro front, Trump announced a ceasefire between Iran and Israel. After a call between the US and Israeli leaders, Israel halted further military strikes against Iran. The Iranian president stated that Iran was ready to engage in dialogue at the negotiating table. The weakening US dollar index supported copper prices. Meanwhile, Powell stated that the current policy is in a favorable position, and it is appropriate to wait and see before considering interest rate adjustments. The vast majority of officials believe that an interest rate cut later this year is appropriate. The US Fed's concerns about future inflation weighed on copper prices in the late session. On the fundamental side, suppliers cleared their inventories at low prices, causing premiums to fall. Overall trading sentiment rebounded somewhat. Given the ongoing need for inventory clearance and capital repatriation, premiums are expected to continue falling today. Overall, although the US dollar index remains weak, the US Fed's statements about inflation concerns are expected to weigh on copper prices today.

2.In-depth Discussion on the Beginning and End of the Expansion of LME Structure 

On Friday evening last week, the price spread between the LME_CA_CASH contract and the July date contract suddenly surged to over $250/mt. By the date of publication, the price spread between LME copper CASH and the July date contract had approached backwardation of $275/mt. This fluctuation sparked various discussions in the US dollar copper market. Combined with similar situations that had previously occurred in LME aluminum, various speculations arose. This article attempts to sort out the recent abnormal structure of LME copper based on some recent market anomalies.
Since the LME shifted to a backwardation structure in 2025, the following situations have existed in the market: before the expiration of the current month's date contract, the backwardation structure between the current month's date and the next month's date expands. After delivery, the Cash contract reverts to a contango structure against the next month's date. The reason lies in the fact that although the LME structure had shifted to backwardation, the absolute inventory remained relatively high. Additionally, there was Russian copper in Rotterdam warehouses (this type of inventory was considered non-movable), which meant that although some financial positions held a tight supply expectation for the future, there was no tight demand in the spot market. This structure provided certain arbitrage opportunities in the market. Taking May as an example, the specific method was: conducting May-June lending before the expiration of the May date contract, converting the May date position into Cash or TOM positions through TOM-NEXT after delivery, and then reversing the direction to establish a Cash-June borrow.

The breakdown of this habitual arbitrage environment can be attributed to the following two reasons: 1. LME inventory has continued to decline, reaching around 95,000 mt by the date of publication. In particular, the Rotterdam warehouse has experienced significant destocking, with current inventory now below the safety line and a large proportion of cancelled warrants, resulting in extremely low deliverable inventory. 2. The LME-SHFE price spread has continued to weaken to the export threshold. Domestic smelters have actively exported to repair the SHFE/LME price ratio. Given the already high procurement costs of imported copper concentrates, it is easy for them to end up with a net short position. Therefore, there are sufficient conditions for a significant expansion of the backwardation between Cash-TOM and TOM-NEXT.

In summary, the recent structural anomaly in the LME seems unexpected but is actually a deliberate strategy. The deterioration of copper concentrate treatment charges (TCs) has increased expectations of tight supply in the future. After the LME structure shifted to backwardation, industrial hedging positions (especially those of smelters) have moved forward significantly. The deterioration of the SHFE/LME price ratio underpinned by copper prices will further exacerbate the procurement costs of copper concentrate raw materials, making it a priority to export a large amount of copper cathode to repair the price ratio. As a result, industrial bears have concentrated in the near-month contracts, and a sharp increase in the structure is inevitable after inventory falls below the safety line.

3.Demand for inventory clearance and capital withdrawal remains, with SHFE copper spot premiums experiencing a price collapse

 Today, the spot prices #1 copper cathode against the SHFE copper 2507 contract for the current month were quoted at parity to a premium of 80 yuan/mt, with an average quoted premium of 40 yuan/mt, down 50 yuan/mt from the previous trading day. The SMM #1 copper cathode price range was 78,320-78,510 yuan/mt. The SHFE copper 2507 contract surged to 78,530 yuan/mt in the early session before declining, touching a low of 78,300 yuan/mt and then rebounding, with the price center continuing to rise. The backwardation (BACK) price spread between futures contracts for the next month fluctuated within 170-200 yuan/mt, and the import loss for SHFE copper for the current month widened to over 1,000 yuan/mt.

       Both purchasing and sales sentiment improved during the day, mainly due to suppliers continuing to clear inventory at low prices, causing premiums to keep falling. Some low-priced supplies were already being sold at a discount. In the early session, suppliers quoted premiums of 70 yuan/mt for mainstream standard-quality copper and 100 yuan/mt for high-quality copper, which then quickly dropped to 40-80 yuan/mt. At this time, market transactions were still in a state of downstream buyers offering low prices. Some suppliers had a need to clear inventory during the day and actively sold off supplies, with transactions for low-priced supplies occurring near parity, which then dropped to a discount of 10 yuan/mt. The overall transaction price center in the market weakened. However, there were fewer non-registered supplies during the day, with transactions occurring at discounts of 70-40 yuan/mt.

       Looking ahead to tomorrow, with the need to clear inventory and capital requirements still present at the end of the quarter, it is expected that spot premiums may continue to fall tomorrow.

4.Inventory Ends Five Consecutive Declines with a Significant Increase; Spot Premiums Fall Under Pressure 

Today in Guangdong, spot #1 copper cathode traded at a discount of 10 yuan/mt to a premium of 70 yuan/mt against the front-month contract, with an average premium of 30 yuan/mt, down 30 yuan/mt from the previous trading day. SX-EW copper was quoted at a discount of 70 yuan/mt to a discount of 50 yuan/mt, with an average discount of 60 yuan/mt, down 30 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 78,395 yuan/mt, up 100 yuan/mt from the previous trading day, while the average price of SX-EW copper was 78,305 yuan/mt, up 100 yuan/mt from the previous trading day.

Spot market: Today, inventory in Guangdong finally ended a five-day consecutive decline, showing a significant increase, primarily due to concentrated arrivals. Affected by this, suppliers had to lower prices to sell their goods. However, as the year-end approached, the enthusiasm for restocking among downstream buyers was not high. As a result, today's premiums declined significantly compared to yesterday, with overall trading activity being weak. As of 11 a.m., high-quality copper for the front-month contract was quoted at 70 yuan/mt, standard-quality copper at a discount of 10 yuan/mt, and SX-EW copper at a discount of 60 yuan/mt.

Overall, with inventory ending a five-day consecutive decline and showing a significant increase, spot premiums came under pressure and fell.

5. Expectations for US Fed Interest Rate Cut Heat Up, Copper Prices Have Strong Support at the Bottom

Futures Market: Overnight, LME copper opened at $9,643.5/mt, dipping to a low of $9,615.0/mt and peaking at $9,697.0/mt before closing at $9,694.5/mt, up 0.35%. Trading volume stood at 13,137 lots, with open interest at 286,663 lots. In terms of price movement, prices initially fluctuated with the center sinking, then rose steadily, touching a high near the close. Overnight, the SHFE copper 2507 contract opened at 78,340 yuan/mt, dipping to a low of 78,200 yuan/mt and peaking at 78,460 yuan/mt before closing at 78,450 yuan/mt, up 0.15%. Trading volume stood at 13,276 lots, with open interest at 154,041 lots. In terms of price movement, prices initially dipped before fluctuating upward, fluctuating at a relatively high level.

[ Copper Morning Meeting Summary] News: (1) Following Waller, another US Fed official has expressed support for an interest rate cut next month. Notably, both governors were appointed by Trump during his first term. On Monday, Fed Governor Bowman, discussing the economy and monetary policy, stated that if inflation pressures remain contained, she would support lowering interest rates as early as July, as risks in the labour market may rise while inflation appears to be steadily moving towards the Fed's 2% target.

(2) The National Federation of Industry and Commerce Automobile Dealers Chamber has issued an initiative calling on automobile producers to optimize rebate policies and shorten the rebate realization period. The initiative includes three key points: first, establishing clear and transparent rebate policies; second, shortening the rebate realization period; and third, eliminating excessive restrictions on rebate realization and usage.

Spot Market: (1) Shanghai: On June 23, #1 copper cathode spot premiums against the front-month 2507 contract were reported at 60-120 yuan/mt, with an average premium of 90 yuan/mt, down 30 yuan/mt from the previous trading day. Looking ahead to today, the significant decrease in inventory in the Shanghai area over the weekend was mainly due to the gradual outflow of delivery warrants. However, there is still pressure to sell and receive payments in the market today, so spot premiums are expected to decline further.

(2) Guangdong: On June 23, Guangdong #1 copper cathode spot premiums against the front-month contract were reported at 20-100 yuan/mt, with an average premium of 60 yuan/mt, down 30 yuan/mt MoM. Overall, despite suppliers actively lowering prices to sell, overall trading remained sluggish, mainly due to bearish market sentiment.

(3) Imported Copper: On June 23, warrant prices ranged from $32/mt to $48/mt, with QP July, and the average price remained unchanged MoM. B/L prices ranged from $50/mt to $72/mt, with QP July, and the average price remained unchanged MoM. EQ copper (CIF B/L) prices ranged from $4/mt to $18/mt, with QP July, and the average price remained unchanged MoM. Quotations are based on cargo arrivals in late June and early July. Overall, the market continued its sluggish trend from last week this week, with most market participants remaining in a wait-and-see stance.

(4) Secondary copper: On June 23, the price of secondary copper raw materials remained unchanged WoW. The price of bare bright copper in Guangdong was 72,600-72,800 yuan/mt, unchanged from the previous trading day. The price difference between copper cathode and copper scrap was 1,020 yuan/mt, up 100 yuan/mt WoW. The price difference between copper cathode rod and secondary copper rod was 875 yuan/mt. According to an survey, import traders reported that due to the fluctuating decline in overseas copper prices, overseas suppliers refused to budge on prices amid tight supply. However, the discount coefficient has been on the high side since June, making it difficult for domestic import traders to secure deals for secondary copper raw materials overseas.

(5) Inventory: On June 23, LME copper cathode inventory decreased by 3,325 mt to 95,875 mt. On the same day, SHFE warrant inventory decreased by 8,354 mt to 25,528 mt.

Price: On the macro front, Fed officials Bowman and Goolsbee both hinted that they would support an interest rate cut in July if inflationary pressures were contained. Goolsbee claimed that there had been a lack of significant inflationary pressures since Trump imposed tariffs on April 2, which might allow the Fed to resume interest rate cuts. Bowman stated that she would support a July interest rate cut if inflation remained mild. The US dollar index continued to decline, supporting copper prices. On the fundamental front, as of Monday, June 23, SMM's nationwide copper inventories in major regions decreased by 16,300 mt WoW to 129,600 mt. Compared to the inventory changes from last Thursday, inventories in all regions across the country declined, mainly due to lower arrivals combined with warrant outflows. As month-end approached, suppliers actively sold off their stocks, but the market remained bearish on the outlook, expecting spot premiums to continue to decline. In summary, with the US dollar index continuing to fall, copper prices are expected to find bottom support today.