Early this week, the market continued to trade around US-Iran negotiations, Strait of Hormuz passage, and US Fed statements. At the start of the week, Iran proposed a plan to reopen the Strait of Hormuz, briefly improving market sentiment; however, as US-Iran negotiations stalled again, actual passage through the Strait of Hormuz remained significantly restricted, and the US warned that any payment of strait transit fees to Iran could face sanctions, reigniting geopolitical uncertainty. In the latter half of mid-week, the US Fed kept interest rates unchanged with a hawkish tone, and rising oil prices fueled inflation concerns, driving the US dollar notably stronger and weighing on copper prices. Overall, the macro theme this week remained the back-and-forth US-Iran standoff, with rising oil prices and a stronger US dollar suppressing risk appetite, leaving copper prices fluctuating at highs but leaning weaker.
Fundamentals side, spot supply remained tight overall, with limited circulating cargoes in the market due to month-end settlement, tight invoices, and suppliers holding back from selling. SX-EW copper and cargoes with invoices dated this month were particularly tight. Although imported copper arrivals increased, domestic copper arrivals remained tight. Demand side, approaching the Labour Day holiday, downstream buyers briefly released pre-holiday restocking demand, but as copper prices hovered at highs, end-user purchasing sentiment remained cautious overall, mostly limited to rigid restocking needs, with actual pre-holiday volume relatively limited. Inventory side, as of Monday April 27, SMM copper inventories across major regions nationwide stood at 248,600 mt, down 10,300 mt WoW, continuing the destocking trend, though providing limited upward momentum against high copper prices.
Looking ahead to next week, the macro logic is not expected to change significantly for now. If US-Iran negotiations make no substantial progress, Strait of Hormuz disruptions and elevated crude oil fluctuations are expected to continue supporting inflation expectations, and the US dollar is likely to stay relatively strong, capping copper prices on the upside; however, on the fundamentals side, tight spot circulation and continued destocking are expected to support prices on the downside, and copper prices are expected to mainly fluctuate at highs in the near term. LME copper is expected to fluctuate within $12,850-13,350/mt, and SHFE copper within 100,500-103,500 yuan/mt. Spot side, as pre-holiday stockpiling concludes, market trading activity is expected to cool temporarily, but low-priced cargoes remain tight. Spot prices against the SHFE copper front-month contract are expected to range from a premium of 30 yuan/mt to a premium of 150 yuan/mt.
