Futures market data from the latest trading session shows the main Shanghai copper contract opened at 108,070 yuan per tonne and settled at 108,110 yuan per tonne, marking a 0.33% gain from the prior day's close. During overnight trading, the contract opened at 108,220 yuan per tonne and finished at 108,150 yuan per tonne, advancing 0.37% compared to yesterday afternoon's settlement.
Spot market conditions indicate that SMM 1# electrolytic copper traded at a premium of 150-270 yuan per tonne over the Shanghai copper 2609 contract, averaging 210 yuan per tonne, which represents a decline of 65 yuan per tonne from the previous session. The 2609 contract initially fell before stabilizing, closing at 107,760 yuan per tonne with a Back structure in the monthly spread, while import profitability remained in negative territory. Sellers adjusted quotes downward multiple times throughout the day, and although high-grade copper supplies remained scarce with some improvement in buying sentiment, downstream participants showed limited acceptance of elevated premiums.
East China social inventories declined more than expected, with combined reductions of 16,400 tonnes across the two key regions. Unfavorable import parity ratios and shipping delays limited overseas arrivals, while the pullback in copper prices encouraged downstream buyers to restock at lower levels. Combined with active selling by holders, these factors drove inventory drawdowns. Looking ahead, inventory destocking and reduced imports provide support for premiums, yet downstream purchasing remains limited to essential needs and sellers still show willingness to offload inventory. Spot premiums are expected to hold today with the market stabilizing, leaving limited room for significant downside movement.
On the macro front, recent reports suggest the U.S. Treasury is considering utilizing the nearly $1 trillion General Account to fund an expanded Treasury buyback program. The TGA, already identified as an available funding source, has accumulated a balance of approximately $950 billion, significantly exceeding the $550-600 billion target level maintained during the previous administration. If implemented, this move would substantially alter market perceptions of the Treasury's capacity to influence long-end interest rates.
Regarding geopolitical developments, U.S. Treasury Secretary Bessent announced multiple economic sanctions targeting Iran to intensify pressure on the country. The U.S. will expand the scope of secondary sanctions against nations conducting business with Iran and urge relevant countries to make a choice. Bessent stated that sanctions decisions have been issued across five key areas supporting Iran's economy—digital assets, technology, gold, aviation, and shipping—with more than 60 entities, individuals, and vessels globally facing sanctions. President Trump is also engaging in calls with various world leaders, urging them to cease commercial dealings with Iran. Iranian Parliament Speaker Qalibaf indicated that Iran's trading partners have stated they will not "take seriously" the U.S. sanctions rhetoric, while Supreme Leader Advisor Mohber emphasized that Iran's response to American threats will be more resolute than ever.
On the mining side, reports from August 21 indicate that Papua New Guinea's Ok Tedi Mining has announced it is evaluating alternative logistics solutions for transporting supplies to its Ok Tedi copper-gold mine due to Fly River water levels falling below normal, which will also increase costs. The company is actively seeking alternative logistics arrangements to ensure fuel supplies, critical consumables, equipment, and operational requirements are met. Managing Director and CEO Kedi Ilimbit stated that mining and processing operations continue, with contingency plans in place and operations being adjusted as needed. Ok Tedi, located in Papua New Guinea's Western Province, produced 105,000 tonnes of copper, nearly 300,000 ounces of gold, and approximately 1 million ounces of silver in 2025. The miner added that drought-related conditions have generated additional costs, particularly in logistics and supply chain management.
Positioning data from August 24 reveals that speculative funds reduced their net long positions in COMEX copper futures for the first time in three weeks. CFTC data through August 18 shows speculative funds holding net long positions of 79,225 contracts in COMEX copper futures and options, down 1,655 contracts or 2% from the previous week, which had seen net buying of 3,084 contracts. Fund long positions stood at 92,690 contracts, decreasing by 3,119 contracts week-over-week, while short positions totaled 13,465 contracts, down 1,464 contracts. Open interest declined by 19,169 contracts to 296,867 contracts.
Consumption patterns show that the copper price rally followed by a pullback released essential downstream demand, with operating rates across various copper product segments rising to varying degrees. Fine copper rod producers saw operating rates reach 61.2%, up 1.89 percentage points; copper cable operating rates climbed to 65.8%, rising 3.55 percentage points; and enameled wire utilization increased to 72.27%, up 2.60 percentage points. The price correction stimulated fixed-price withdrawals, allowing most enterprises to reduce finished product inventories. In contrast, recycled copper rod operating rates fell 3.36 percentage points to 13.72%, constrained by scrap copper supply and invoice costs, while brass rod operating rates edged up only slightly to 48.74%, with raw material shortages limiting production flexibility.
On the raw materials front, copper rod processing fees completed their recovery during the week, alleviating the earlier compression of margins. Looking to next week, with copper prices stabilizing, downstream bearish sentiment is reemerging, and combined with some enterprises postponing maintenance, fine copper rod operating rates are expected to decline to 59.96%. Cable operating rates should tick up slightly to 67.1%, while enameled wire utilization may ease modestly. Recycled copper rod and brass rod segments face limited improvement due to raw material constraints, and the overall copper products sector remains constrained by the traditional off-season, with order sustainability in question. Close monitoring of actual end-user purchasing activity is warranted.
Inventory data shows LME warehouse receipts changed by 1,675 tonnes to 240,250 tonnes, while SHFE receipts declined by 5,002 tonnes to 41,103 tonnes. Domestic electrolytic copper inventory in the Chinese market stood at 114,200 tonnes as of August 24, down 20,200 tonnes from the previous week.
The strategy outlook remains cautiously bullish. With the exchange delivery squeeze dynamics fading this week, copper prices are balancing between macroeconomic forces and fundamental factors. LME copper experienced a rally followed by a pullback, while domestic electrolytic copper continued to accumulate inventory, with fundamental pressures gradually emerging. Mining processing fees remain deeply negative, overseas mine incidents introduce supply disruptions, and scrap copper's substitution role is limited by invoice cost constraints. Copper product operating rates only show a pulse-like recovery during price corrections, with end-users still in the traditional consumption off-season and no substantive demand recovery yet visible.
On the macro side, the dollar's periodic weakness provides support for copper prices, but Fed policy retains hawkish risks. Next week's Jackson Hole symposium represents a key variable, with copper prices likely to trade in a range-bound but firm manner. The expected trading range is 106,000 yuan per tonne to 110,000 yuan per tonne.
For operational guidance, industry participants should maintain essential procurement and restocking at lower levels, carefully manage raw material inventories, and avoid speculative hoarding. Should prices decline into the 106,000-106,600 yuan per tonne range, opportunities exist to purchase physical copper or establish hedging positions at favorable levels. Arbitrage strategies should be postponed, while selling put options may be considered. Key risks include high prices suppressing demand and liquidity disruption scenarios.