On the macro front, copper prices rose first and then fell this week, with a sharp pullback at the end of the week. The US August non-farm payrolls released last Friday were significantly stronger than expected, prompting the market to raise expectations for a US Fed rate hike in September, which weighed on copper prices. However, at the start of the week, a stronger yen drove the US dollar index lower, and copper prices drifted higher, repeatedly hitting record highs for both LME copper and COMEX copper. At the end of the week, reports that the White House had not yet decided whether to impose tariffs on copper cathode rapidly cooled expectations for US copper tariff policy. LME copper bears added positions while SHFE copper bulls reduced positions, and the COMEX-LME price spread for the September contract narrowed from $135.1/mt on September 8 to -$12.86/mt at 5:00 pm on September 11. During the week, LME copper hit a high of $14,858.5/mt before pulling back to $14,147/mt; the most-traded SHFE copper contract rose to a high of 112,330 yuan/mt and fell to a low of 108,180 yuan/mt. As of 4:00 pm Beijing time on September 11, LME copper closed at $14,233/mt, and the most-traded SHFE copper contract closed at 108,990 yuan/mt.
In terms of fundamentals, downstream buyers engaged in dip-buying as copper prices fell at the end of the week, and with LME and China inventories at low levels, this supported copper prices. In addition, as LME copper pulled back sharply, the import profit margin shifted from a loss of 621.89 yuan/mt on September 10 to a profit of 618.07 yuan/mt on September 11, reopening the import window. However, with the September contract delivery imminent, there was limited room to act on this import profit opportunity. In terms of supply, arrivals of domestic copper and imported cargo increased, leading to a slight improvement in marginal supply, though the overall supply situation remained tight. This week's inventory decline largely reflected earlier insufficient arrivals and does not yet indicate that peak-season consumption has fully kicked off. Meanwhile, the support for copper prices from inventory is shifting from driving gains to limiting declines.
Looking ahead to next week, after tariff expectations cool, the market will refocus on fundamentals for pricing. LME and China inventories continue destocking and remain at low levels, and the yet-to-materialize import replenishment supports copper prices. However, attention should be paid to the US August CPI data to be released at 8:30 pm Beijing time on September 11. If August CPI remains strong alongside high oil prices and elevated PCE data, this will strengthen the case for the US Fed to control inflation through rate hikes, causing fluctuations in copper prices. Overall, SHFE copper is expected to outperform LME copper, and there is room for the import window to repair. LME copper is expected to trade in the range of $14,100-14,400/mt, while SHFE copper is expected to trade in the range of 107,500-109,900 yuan/mt.
