US Economic Data Shows Strong Resilience, US Dollar Index Rebounds Significantly, Copper Under Pressure

SMM, Oct 12: Macro front, US September non-farm payrolls data exceeded expectations. CPI recorded 2.4%. Consumer and employment data showed that although the US economy was still cooling after the interest rate cut, the cooling rate slowed marginally. Confidence in the resilience of the US economy increased after the significant rate cut in September, with the 10-year US Treasury yield returning above 4%. The US dollar index rose continuously during the National Day holiday, briefly breaking the 103-point mark. In China, after the PBOC‘s ”stimulus policy package”, the stock market saw an investment boom, with the Shanghai Composite Index hitting the limit-up after the National Day holiday, once reaching 3,600 points. Although it cooled later, the domestic capital market maintained a stable and positive trend with the implementation of the 500 billion "swap facility" this week. Copper futures were under pressure due to the US dollar's surge, with LME copper falling from $10,000/mt to around $9,700/mt; SHFE copper dropped from 79,000 yuan/mt to above 77,000 yuan/mt.

Fundamentally, spot trading in the copper concentrate market was temporarily inactive after the London meeting, with long-term BM negotiations still needing adjustment. Due to the large arrival of copper cathode in mid-to-late October to November, importers held a pessimistic outlook on future price ratios, actively offloading in the imported copper market in the Shanghai bonded zone, with a noticeable decline in transaction focus. In domestic trade, major consumption provinces like Guangdong and Jiangsu significantly stocked up during the National Day, with downstream purchase willingness weak under high copper prices, and spot premiums continued to decline throughout the week. Looking ahead to next week, the Eurozone will hold its October interest rate meeting, and if another rate cut occurs as expected, it may guide the US dollar to continue warming. Domestically, Q3 GDP growth is about to be announced, and with the National Development and Reform Commission and PBOC's stimulus policy package macro policies in Q4 may accelerate to support the fundamentals. In the spot market, as the last trading day of the SHFE copper 2410 contract approaches next week, holders are actively seeking arbitrage opportunities under the backwardation structure, and spot premiums are expected to fluctuate downward. The spot price against the 2411 contract is expected to range from a discount of 50 yuan/mt to a premium of 50 yuan/mt.