Copper’s Quiet Coup: Royalty Gridlock, China EV Whispers, and a TSXV Feeding Frenzy Could Ignite July

Believe it or not- Copper is hovering near five-dollar territory. Mid-July negotiations over Chile’s new royalty rules, fresh hints of Chinese electric-vehicle stimulus, shrinking exchange inventories and a financing-starved junior-miner sector give the metal a double-barrel catalyst. A monthly close above $5.15 would point to the 2022 peak near $5.55.

  1. SPOT-CHECK THE TAPE
    COMEX front-month trades $4.98–$5.01/lb intraday. Year-to-date gain is roughly eight percent, beating the S&P 500 on a beta-adjusted basis. Commodity trend-followers flipped to net-long when price cleared $4.55 on 28 June and have stayed long.
  2. POLITICAL FUSE — CHILE’S ROYALTY “FINE-TUNE”
    The royalty law in force since January 2024 lifted the majors’ effective tax from 39 to about 44 percent. A promised mid-July review may add another ad-valorem point unless miners win new CAPEX deductions. Stalemate tightens supply.
    • Large caps such as BHP, Anglo American and Antofagasta are partly hedged.
    • Mid-tiers like Lundin Mining (LUN.TO) and Capstone Copper (CS.TO) remain mostly unhedged and could idle marginal pits.
    • TSXV juniors welcome higher prices and the headline drama that helps marketing their next placement.
  3. DEMAND FUSE — CHINA EV STIMULUS 2.0
    Beijing restated on 7 July that new EV rebates and charging-credit rules will be released this quarter. Metals desks are already front-running cathode orders. Shanghai Metals Market shows June smelter operating rates at 54.6 percent, up 1.6 points month-on-month, hinting at stronger refined-copper demand in the third quarter.
  4. LME SHADOW STORY — SHRINKING STOCKS
    Visible LME inventories are below 160 000 tonnes, a low not seen since October 2023. Traders say Chinese bonded-warehouse drawdowns hide an even larger deficit. Historic patterns show a six-week average price gain of about twelve percent when visible stocks fall through 140 000 tonnes.
  5. TSX-AND-FRIENDS JUNIOR WATCHLIST
    • Patriot Battery Metals (PMET.V, C$1.85 bn) – CV13 infill assays due mid-July; strong grades would speed a financing.
    • Solaris Resources (SLS.V, C$1.1 bn) – Warintza resource update pending; royalty headlines add leverage to its Ecuador story.
    • Capstone Copper (CS.TO, C$2.3 bn) – Cozamin PEA lands 18 July; any CAPEX pop feeds the “Chile hedge” narrative.
    • Surge Copper (SURG.V, C$95 m) – Ootsa drilling restarts; one good hole plus a copper price pop could move liquidity fast.
  6. Possible tactic: long a basket of these juniors while hedging with March 2026 copper puts, or pair Patriot long against a Freeport-McMoRan short to express royalty-shock beta.
  7. OPTION SKEW
    October COMEX $5.40 calls trade on 24 percent implied volatility, the cheapest 90-day upside premium since 2022. $4.40 puts sit at 31 percent IV. The market is paying for downside insurance and ignoring upside convexity.
  8. TRADE FRAMEWORK (HYPOTHETICAL — DO YOUR OWN RESEARCH)
    Directional: buy September COMEX $5.20 calls, cut the position if copper settles below $4.75.
    Equity kicker: long Capstone and Patriot, financed with out-of-the-money covered calls.
    Volatility swing: long December calls and short August calls to capture a July spike followed by option-premium decay.
  9. CATALYST CALENDAR
    10 July – China CPI/PPI; weak inflation could spark more stimulus.
    15 July – Chile royalty review session; gridlock is bullish, concessions neutral.
    18 July – Capstone Cozamin PEA; strong NPV can ignite TSX mid-caps.
    23 July – Federal Reserve policy blackout starts; a drifting U.S. dollar may lift metals.


HET CALL
Copper is testing five dollars with half of Wall Street away from their screens. Royalty politics plus Chinese EV whispers provide the kindling. If July settles above $5.15, the chart target is $5.55. Monitor LME inventories, dark-pool prints in CS.TO and COMEX option flow—your leveraged long may depend on it.

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