Mixed Macro and Fundamentals Lead to Weak Performance of Copper Futures 

On the macroeconomic front, the US June CPI data recorded 3.0%, down 0.1% MoM, lower than market expectations. The cooling of the employment and consumption markets occurred synchronously, causing the US dollar index to fall sharply to around 104.5 points in the week ending July 12. The yield on the 10-year US Treasury also fell to 4.162%, marking a new low since April 2024. These signs indicate that the US economy is slowing down, and market expectations for a rate cut in September have strengthened further. Internationally, due to new progress in the ceasefire agreement between Israel and Palestine, SCFIS(Europe) futures prices dropped significantly, and spot market quotes also loosened accordingly. For Europe, imported inflation may be curbed. Domestically, the June CPI fell 0.2% MoM, and the PPI fell 0.8% YoY, indicating a mild economic slowdown within the year. After the People's Bank of China narrowed the "interest rate corridor," the capital market cooled down, with the Shanghai Composite Index falling to a low of 2,904 points, and the non-ferrous metals market generally declined. Both LME copper and SHFE copper fell, with LME copper prices falling from nearly $9,900/mt to $9,750/mt, and SHFE copper prices falling from nearly 80,000 yuan/mt to 78,500 yuan/mt.
Fundamentals side, after the mid-year negotiations of Antofagasta, spot TCs for copper concentrate continued to rebound. The CSPT set the guidance spot TC at $30/mt, and there is still room for the copper concentrate index to rise. For copper cathode, due to the continuous increase in inventory at LME Asian warehouses, copper prices are under short-term pressure; the contango structure of the LME 0-3 contract expanded, making sellers less motivated to ship. In the domestic market, due to the impact of "Document No. 783," the operating rates of secondary copper rod producers in Jiangxi, Anhui, and Zhejiang provinces have significantly declined, with some cable makers shifting to copper cathode rod as raw material, thereby boosting the demand for copper cathode. Domestic copper cathode social inventory showed a destocking trend.
Looking ahead to in the week ending July 19, several US Fed officials will deliver speeches, which may provide guidance on the subsequent rate cut path. With the ECB's July rate cut decision imminent, attention will be on whether three rate cuts within the year can be realized, and the euro's potential strengthening against the dollar may further depress the US dollar index. The upcoming 20th Third Plenary Session is expected to still focus on deleveraging. Favourable macro factors are expected to push up copper futures. LME copper is expected to trade between $9,800-10,000/mt, and SHFE copper between 78,500-80,500 yuan/mt. In the spot market, falling stocks and SHFE contango structure mean spot quotes will strengthen after the delivery of SHFE 2407 contract. SMM sees spot discounts of 50-200 yuan/mt against 2408 contract.
The model predicts that the price range for the most-traded copper contract from July 11 to July 17 will be [77,900, 81,900], with a price center of 79,990 yuan/mt. The extreme price range is [76,280, 83,520], the normal price range is [77,360, 82,440], and the conservative price range is [78,440, 81,360]. The price trend is expected to be bullish. The support range is [77,360, 78,440], and the resistance range is [81,360, 82,440].