In terms of macroeconomics, Fed Chairman Powell's speech last Friday night essentially signaled a rate cut in September. As a result, US bond yields briefly fell to 3.79% that night, and the US dollar index also dropped to around 100.6. The decline in US bond yields led to a rapid narrowing of the China-US interest rate spread recently, with the 10-year China-US bond spread shrinking to about 170 basis points, attracting a large influx of overseas assets and pushing the offshore RMB exchange rate to break through 7.09 on Thursday. Meanwhile, due to the Libyan government's announcement to halt all oil production and exports, crude oil prices surged, raising market concerns about imported inflation risks, and the US dollar index rebounded. This week, copper prices moved downwards after a higher opening, with LME copper rising to $9,453/mt at the beginning of the week before falling back to $9,200-9,300/mt. SHFE copper remained relatively firm, surging to 75,580 yuan/mt mid-week before falling back to around 74,000 yuan/mt.
On the fundamentals, LME Asian warehouse inventories increased significantly again this week. After the overseas market came under pressure, the import profit window opened, and market trading activity increased towards the end of the week. In domestic trade, the high copper prices at the beginning of the week, combined with a large influx of imported copper, suppressed the rise in spot premiums. However, as copper prices fell mid-week, demand rebounded significantly.
Looking ahead to next week, the US August non-farm payrolls data and unemployment rate will be released. If the job market continues to cool after the previous significant adjustments, the Fed may accelerate its rate cut path. Several countries will also release August PMI data, and the cooling of global economic activity may accelerate the narrowing of interest rate spreads across countries. LME copper is expected to fluctuate between $9,100-9,350/mt, and SHFE copper is expected to range between 72,000-74,500 yuan/mt. In the spot market, domestic smelters are showing signs of raw material shortages, and with the expected recovery in downstream consumption in September, the SHFE copper contango structure is expected to continue narrowing, pushing up premiums. Spot premiums for the 2409 contract are expected to range from flat to 100 yuan/mt.
