On the macro front, copper prices retreated from highs this week. Early in the week, the US rejected the peace agreement proposed by Iran, reviving uncertainty over the reopening of the Strait of Hormuz, and rising oil prices fueled inflation concerns. In addition, 12:00 Beijing time on September 29 was viewed by some market participants as an important observation period for US copper cathode tariffs. Previously, the US Department of Commerce submitted a copper market update on June 30, and the market referenced the common 90-day review cycle under Section 232, inferring that a related decision could emerge around September 28 US time. However, the document was a market update required under the original tariff announcement and was not explicitly defined as a new formal Section 232 investigation report, and the written explanation after the president makes a decision can be published later, so that timing was not a legally binding clear deadline. As of press time, there was no further news on the relevant policy, the market remained largely in a wait-and-see mode, and tariff-related trading showed no notable pickup. Subsequently, New York Fed President Williams said there was still a possibility of another rate hike within the year, but there was no need to rush, which cooled market rate hike expectations and helped copper prices gradually stabilize. During the week, LME copper hit a high of $14,585/mt and a low of $14,342/mt; after the Mid-Autumn Festival holiday, the most-traded SHFE copper contract rose to a high of 109,960 yuan/mt and a low of 108,970 yuan/mt. As of 11:00 am on September 30, LME copper settled at $14,457/mt, and the most-traded SHFE copper contract settled at 109,620 yuan/mt.
On the fundamentals front, both COMEX and LME inventories edged up this week. The COMEX inventory buildup remained the result of copper resources continuing to flow to the US in the earlier period, and such inventories are unlikely to flow back to non-US markets in the short term; however, since late August, the LME/COMEX price spread has continued to narrow. As of press time, the COMEX 2610 contract was at a discount of $27.69/mt to LME 3M, and the 2611 contract premium was only $62.21/mt, both not enough to cover transportation, financing, warehousing, and delivery conversion costs, leaving the arbitrage window for shipping new physical copper to the US essentially closed. In China, as of September 30, SMM copper inventories in major regions nationwide increased by 900 mt WoW to 73,700 mt. Although still at low levels, the buildup during the pre-holiday stockpiling window reflected that imported and domestic supply arrivals had begun to replenish the circulating market. Meanwhile, the import loss narrowed to 650 yuan/mt, and the import window remained closed. With the dual-holiday stockpiling largely completed, high copper prices and the deep backwardation structure further suppressed downstream purchases, and domestic supply-demand tightness eased from earlier levels.
Looking ahead to next week, the US PCE inflation data and employment report released during the National Day holiday will recalibrate market judgment on the US Fed's rate path for the year and set the direction for copper prices after the holiday. If inflation and employment continue to show strength, rate hike expectations will heat up again, and a stronger US dollar and higher US Treasury yields will weigh on LME copper. With no clear progress on US copper cathode tariffs after the key observation period, the base case is that the LME/COMEX spread will remain at levels not enough to cover cross-market arbitrage costs, and the additional appeal of the US for global copper resources will decline further. If a clear signal of tariffs is released later, a rapid widening of COMEX forward premiums will again attract copper to the US, intensifying supply tightness in non-US regions. During the long domestic holiday, downstream shutdowns will increase, while smelter production and import arrivals will continue, leaving social inventory facing upward pressure after the holiday. Overall, copper price centers are expected to decline next week, with LME copper expected to trade at $14,200-14,650/mt and SHFE copper at 108,800-110,800 yuan/mt.
![Stockpiling before the holiday winds down and new orders pull back noticeably; industry operating rates decline along with holiday production schedules [SMM Enamelled Wire Market Weekly Review]](https://imgqn.smm.cn/usercenter/Fxolk20251217171712.jpg)
