Copper prices fluctuated downward this week. At the start of the week, expectations for US Fed interest rate cuts continued to cool, and the market even began to price in possible rate hikes, weakening expectations for macro liquidity and putting copper prices under pressure, causing them to pull back. Mid-week, after the US Fed kept rates unchanged, the US PPI annual rate rose more than expected to 3.4, further weighing on market expectations for interest rate cuts within the year. According to market sources, traders no longer priced in any US Fed interest rate cuts this year, and bets on easing expectations faded further. The continued escalation in US-Iran tensions fueled safe-haven sentiment, while elevated oil prices intensified concerns over inflation and economic weakness. The stronger US dollar index also suppressed copper prices. In terms of fund positioning, the futures were mainly marked by long liquidation, with risk-off sentiment among funds rising and willingness to take profits at high levels increasing. Overall, macro headwinds dominated market sentiment, and copper prices came under pressure and corrected lower.
Fundamentals side, copper concentrates TC continued to pull back. This week, the imported copper concentrates index was reported at -$67.32/mt, further lower WoW and at a historical low, with smelting pressure continuing to mount. In copper cathode, the continued downward shift in the center of copper prices significantly stimulated restocking demand from downstream enterprises, and spot inventory showed a rapid destocking trend. The import window remained open, but actual subsequent inflows of imported cargo still need further observation. According to SMM, orders at most downstream enterprises surged, with generally strong enthusiasm for buying the dip. Some sectors were notably boosted by the pullback in copper prices, and order performance improved.
Looking ahead to next week, the macro logic remains unchanged. Cooling expectations for US Fed interest rate cuts, intertwined with geopolitical tensions in the Middle East, will continue to weigh on copper prices. However, fundamental support for copper prices is gradually strengthening. Faster destocking and stronger downstream restocking willingness will limit downside room, and copper prices are expected to continue fluctuating near the range in the short term. LME copper is expected to fluctuate between $11,700/mt and $12,500/mt, and SHFE copper between 91,000 yuan/mt and 97,000 yuan/mt. Spot side, as downstream restocking continues and inventory is drawn down, spot premiums are expected to continue to recover, but inflows of imported cargo and suppliers selling on strength will cap upside room. Spot prices against the SHFE copper 2604 contract are expected to range from a discount of 120 yuan/mt to a premium of 20 yuan/mt.
