Domestic and foreign funds, coupled with the macro front, pushed copper futures to rise continuously

Last week, on the macro front, the US Fed released the Minutes of its June meeting. Employment data continued to decline, and PMI remained weak for three consecutive months, strengthening market confidence in a cooling US economy and significantly increasing expectations for subsequent rate cuts. US Treasury yields and the dollar both fell, while US stocks rose again. Overseas capital flowed back into risky assets, leading to a general rise in the non-ferrous metals market. The Eurozone's June meeting Minutes appeared relatively conservative, maintaining a cautious stance on the future rate cut path. Domestically, the People's Bank of China began openly borrowing government bonds in the secondary market during the week, pushing the 10-year government bond yield significantly higher. Against the backdrop of the previous "asset shortage," the central bank repeatedly emphasized the need for "long-term government bond yields to match long-term economic growth rates," further advancing the market-oriented process of domestic interest rates. Domestic and foreign funds, coupled with the macro front, pushed copper futures to rise continuously. LME copper surged throughout the week, reaching $9,918/mt mid-week, while the most-traded SHFE copper contract broke through the 80,000 yuan/mt mark again, testing 80,520 yuan/mt mid-week. On the fundamentals side, copper concentrate TC slightly rebounded, and the tight spot supply sentiment eased after the signing of semi-annual long-term contracts. For copper cathode, the brief opening of the import window led to an increase in the inflow of imported copper during the week. SHFE and LME inventories both continued to rise, expanding the contango structure between the two. Mid-week, sellers' reluctance to sell heightened, and spot premiums for standard-quality copper continuously rose, forcing downstream producers to turn to imported EQ copper for procurement. Looking ahead to the week of July 8-12, with the upcoming release of CPI data from both China and the US, and the US Fed's semi-annual monetary policy Minutes, if signs of cooling inflation are evident, the probability of a first rate cut in September may continue to increase, potentially pushing copper futures prices higher again. LME copper is expected to trade between $9,750-10,000/mt, while SHFE copper is expected to trade between 78,500-80,500 yuan/mt. In the spot market, as the delivery of the SHFE 2407 contract approaches, the SHFE contango continues to widen, making it easier for spot premiums to rise. We see spot discounts of 0-50 yuan/mt and premiums of 0-100 yuan/mt against SHFE 2407 contract.