US Fed's stance wavers as fundamental demand support emerges [SMM Macro Weekly Review]

Macro, expectations for US Fed interest rate cut show clear internal divisions, with the market wavering on the September policy path. US economic data is mixed; PMI hit an eight-month high, indicating economic resilience, but initial jobless claims rose significantly, reinforcing signals of weakening employment. The misalignment between inflation and employment has intensified dollar volatility, leading copper prices to fluctuate downward. Domestically, China plans to launch a 500 billion yuan quasi-fiscal tool, focusing on new energy and artificial intelligence, which is bullish for medium and long-term copper consumption. Overall, the interplay of overseas interest rates and tariff negotiations, geopolitical developments, and Chinese policy support keeps LME copper around $9,700/mt, while SHFE copper moves sideways near 78,700 yuan/mt.

Fundamentally, mine tenders were active this week, with Indonesia expecting its copper concentrate exports to reach 90% of the government-approved export quota for this year. However, El Teniente's production forecast for the year remains significantly lower, limiting upside room for TC. Domestically, the backwardation structure of SHFE copper widened this week. Despite a notable increase in imported copper arrivals, downstream consumption showed strong support at the end of the off-season. In general, a tight balance is expected to persist in September.

Looking ahead to next week, the US Fed has not provided clear guidance on the direction of interest rate cuts, making it less likely for the market to be significantly affected by dollar fluctuations in the short term. Characteristics of the peak consumption season are beginning to emerge, providing strong support on the demand side for base metals. LME copper is expected to fluctuate between $9,700-9,850/mt, and SHFE copper between 78,500-79,500 yuan/mt. On the spot front, increased arrivals have impacted price spreads among brands, and a short-term rise in imports may put slight pressure on premiums. Spot prices against the SHFE copper 2509 contract are expected to range from a premium of 30 yuan/mt to 200 yuan/mt.