Macro side, the US Fed's interest rate cuts and balance sheet reduction process are initially showing pressure on the monetary market. At the beginning of the week, there was a wave of sell-offs in US Treasuries, with the 10-year Treasury price plunging and the yield strongly rebounding to around 4.2%. The inversion of long and short-term yields has somewhat eased. The market is once again focusing on the US debt ceiling risk and the potential inflation rebound pressure after the US elections. With capital retreating, the US dollar index has returned above 104 points. In China, the National Development and Reform Commission stated that nearly half of the incremental policy measures have been introduced, and the remaining measures will also be accelerated. The focus of special bond issuance remains a key policy in Q4. As the GDP annual rate for the first three quarters recorded 4.8%, the market expects the policy stimulus in Q4 to further expand. Domestic liquidity and macro easing continue to improve. During the week, copper prices were pressured by the overseas market, with LME copper falling from around $9,750/mt to around $9,500/mt; SHFE copper fell from around 77,500 yuan/mt to around 76,000 yuan/mt.
Fundamentals side, due to consecutive accidents at the Daye Hongsheng smelter and the Manyar smelter, the tight supply of copper concentrates in Q4 has slightly eased. The TC transaction center has returned to the mid-$10s. For copper cathode, due to a significant increase in the arrival of imported copper recently, Yangshan copper premiums have plummeted. Although the SHFE/LME price ratio has not significantly deteriorated, transaction prices continue to decline. In domestic trade, domestic consumption remains weak, and traders' activity has also decreased during the week. After turning into a buyer's market, spot premiums continue to fall. Looking ahead to this week, the US October non-farm payrolls data and unemployment rate performance remain the market's focus. Entering November, the US elections and the US Fed's balance sheet reduction expectations will continue to pressure copper prices. Under the release of favorable macro conditions in China, the October PMI is expected to slightly rebound. With mixed factors, domestic market support is stronger than the overseas market. LME copper is expected to run in the range of $9,450-9,650/mt, and SHFE copper is expected to run in the range of 75,500-77,500 yuan/mt. In the spot market, with the circulation of cargoes with invoices dated next month, spot premiums will be further lowered, but increased trading activity after industry conferences is expected to provide some support. Spot prices against the SHFE copper 2411 contract are expected to range from a discount of 100 yuan/mt to parity.
