Expectations of an interest rate cut on the macro front support copper prices, while the tight raw material supply situation has eased somewhat [SMM Macro Weekly Review]

  On the macro front, the US added only 73,000 non-farm jobs in July, and the ISM manufacturing PMI fell to 48, weakening the US dollar and providing a temporary boost to copper prices. The US Fed's overall tone was dovish, with multiple Fed officials expecting two interest rate cuts in H2, providing support for risky assets. However, tariff trade and policy uncertainties still linger in the market. Trump has successively proposed tariff plans on pharmaceuticals, chips, and India, and accelerated personnel adjustments and the battle for the Fed chairmanship, pushing up market risk aversion and suppressing the rebound space for copper prices. In China, trade volume for imports and exports surged MoM in July, with exports growing by over 8%, maintaining strong resilience. LME copper fluctuated around $9,700/mt and SHFE copper around 78,500 yuan/mt during the week, with trading volume and open interest slightly declining, showing an overall weak and volatile pattern.

  On the fundamental front, copper concentrate imports remained high in July. According to SMM, the export license for Grasberg copper concentrates will expire in mid-September, and a large amount of shipments are still expected in August. PT Gresik smelter in Indonesia also underwent unexpected maintenance due to oxygen supply equipment failure, which is expected to last for 2-4 weeks. Domestically, the operating rate of copper semis declined overall, with consumption showing a weakening trend. Spot premiums continued to pull back during the week. Overall, the tight raw material supply situation has eased somewhat. With domestic consumption entering the off-season, supply is relatively loose, and spot premiums are declining.

  Looking ahead to next week, the macro front is expected to be quiet. US July CPI is expected to continue to slow down marginally, providing more support for the September interest rate cut expectation. The bottom of copper prices is expected to rise. LME copper is expected to fluctuate between $9,600-$9,750/mt, and SHFE copper between 77,500-78,500 yuan/mt. On the spot front, the weekly operating rate of copper semis is expected to decline, while smelter inventory is expected to build up, increasing domestic trade sales pressure due to the closed export window. Spot prices against the SHFE copper 2508 contract are expected to range from a discount of 50 yuan/mt to a premium of 150 yuan/mt.