Copper prices fluctuated rangebound during the week, supported by rigid supply tightness. [[SMM Macro Weekly Review]]

On the macro front, the macro environment remained subdued this week, with key economic data indicators mostly released during the Labour Day holiday. Investors expected China to be more resilient than the US, but concerns about economic slowdown, US tariffs, and uncertainties surrounding Trump's policies led to increased market volatility. Expectations for policy easing cooled, with greater focus on long-term reforms rather than short-term stimulus. China's April PMI pulled back this week, with most indicators fluctuating below the 50 mark, indicating a short-term slowdown. The offshore yuan (USDCNH) gapped lower to 7.27, driven by exporters selling US dollars, stop-loss orders, and a lower central parity rate. This week, LME copper fluctuated rangebound around $9,300-9,450/mt, while SHFE copper fluctuated rangebound between 77,000-78,000 yuan/mt.

On the fundamental front, it was heard this week that exports from the Collahuasi copper mine faced hindered transportation, and copper concentrates originally destined for China from the US were redirected to regions such as Japan, South Korea, and India due to tariff impacts. The raw material market remained tight. For copper cathode, the destocking speed in China was astonishingly fast in April, with SMM social inventory dropping below 130,000 mt as of the day of publication. Spot premiums continued to rise. The backwardation structures for nearby months in LME, SHFE, and BC copper all widened, with downstream fabricators overstocking during the Labour Day holiday to guard against a surge in spot premiums in the future.

Looking ahead to next week, on the macro front, trade war negotiations still await further progress, with short-term export rigidity taking a hit. On the fundamental front, the rigidity of copper market supply and destocking expectations during the Labour Day holiday are still expected to support copper prices. It is anticipated that LME copper will fluctuate between $9,200-9,500/mt, while SHFE copper will fluctuate between 76,000-78,500 yuan/mt. On the spot front, registered warrants in China have decreased to around 40,000 mt, and spot premiums continue to show an upward trend, with upside room remaining for domestic and overseas spot premiums. It is expected that spot prices against the SHFE copper 2505 contract will fluctuate between a premium of 200 yuan/mt and 300 yuan/mt.