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In terms of macroeconomics, this week the market once again focused on the tariff policy direction under the Trump administration. The US dollar index plunged to around 108 points at the beginning of the week. Mid-week, US labor market and CPI data showed that the economy remained resilient, pushing the US dollar index back above 109 points by the end of the week. The US Fed's monetary policy meeting minutes indicated a cautious stance on interest rate cuts in 2025. However, supported by fundamentals, copper prices remained firm, with LME copper climbing from around $8,900/mt to approximately $9,100/mt during the week. SMM noted that due to uncertainties surrounding US tariff policies, the price spread between the LME 0-3 contract and the COMEX most-traded contract widened throughout the week, reaching over $600/mt during Friday's session. Domestically, China's December CPI came in below market expectations, but core CPI grew MoM. Fundamentals remained generally stable. SHFE copper rose from 73,500 yuan/mt to 75,000 yuan/mt during the week.
On the fundamentals side, trading activity in the copper concentrates market increased this week, with buyer demand continuing to pressure TC levels. For copper cathode, the import arbitrage window closed due to rising copper prices, and a supply-demand mismatch persisted in the spot market between buyers and sellers. In the domestic market, traders' restocking demand drove premiums significantly higher, while deliverable inventories were in short supply throughout the week, further widening the price spread between Shanghai and Guangdong.
Looking ahead to next week, as overseas markets continue to push copper prices higher, an upward trend is expected. If US non-farm payrolls data falls below market expectations, it will provide sustained upward momentum for copper prices. LME copper is expected to fluctuate between $8,900-9,200/mt, while SHFE copper is forecast to range from 74,000-76,000 yuan/mt.
In the spot market, short-term port arrivals of imported copper are expected to decrease, tightening the supply of circulating goods in Shanghai and making premiums more likely to rise than fall. Spot prices against the SHFE copper 2501 contract are expected to remain between a premium of 100 yuan/mt and 220 yuan/mt.
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