The U.S. tariff moratorium period is shortened, and LME copper jumps initially and then pulls back within the week [SMM Macro Weekly Review]

  On the macro front, US labour market data has fluctuated repeatedly. Early in the week, ADP employment figures saw the largest decline since March 2023, but non-farm payrolls data unexpectedly rebounded strongly, creating a clear divergence and causing market expectations for the US Fed's policy to continue to swing. Initially, weak employment data boosted market bets on two interest rate cuts within the year, weighing on the US dollar and supporting copper prices. However, with the release of non-farm payrolls data, expectations for interest rate cuts plummeted, the US dollar rebounded, and pressure mounted on copper prices. Meanwhile, repeated statements by the Trump administration on tariff strategies and the approaching July 9 tariff suspension deadline have injected uncertainty into the global trade environment. The US Treasury Secretary has pressured countries to complete negotiations promptly, otherwise tariffs may return to the high levels seen in early April, exacerbating the decline in market risk appetite. This week, LME copper has repeatedly tested the $10,000/mt mark, while SHFE copper has also seesawed above the 80,000 yuan/mt level.

  On the fundamental front, the LME backwardation in the near term narrowed this week. LME inventory stopped falling and rebounded, with the first batch of Chinese export cargoes completing transfer to delivery warehouse, and the SHFE/LME price ratio slowly recovering. Although high copper prices have dampened downstream consumption enthusiasm, suppliers still exhibit reluctance to budge on prices. The overall market supply of cargoes remains tight, and spot market premiums have remained firm. Overall, both supply and demand in the market are weak.

  Looking ahead to next week, with the US tariff suspension deadline approaching, global trade uncertainty is set to increase. Given weak consumption, LME copper is at risk of declining from its highs. It is expected that LME copper will fluctuate between $9,750 and $9,000/mt next week, while SHFE copper will fluctuate between 77,500 and 79,000 yuan/mt. On the spot front, with the domestic situation of weak supply and demand persisting and the current low inventory levels, the premium gap between brands has widened. It is expected that spot prices against the SHFE copper 2507 contract will range from a premium of 50 yuan/mt to a premium of 180 yuan/mt.