The US dollar initially weakened then strengthened during the week, while copper prices broke through the 80,000 yuan mark before pulling back [SMM Macro Weekly Review]

At the beginning of this week, copper prices were boosted by overall market sentiment, with LME copper breaking through $10,000/mt and SHFE copper surpassing 80,000 yuan/mt. However, from a macro perspective, poor government bond auction results in some European countries and a slight rise in the US dollar index led to a pullback in copper prices mid-week. The market remains firm on its bet for an interest rate cut in September, showing strong support at the bottom. By Thursday and Friday, influenced by weak "US ADP employment data", rising initial jobless claims, and pending non-farm payrolls data, the market became more cautious, and a stronger US dollar index suppressed copper prices. Overall, this week, expectations of easing and geopolitical risks provided upward support, but policy uncertainties and employment data volatility caused copper prices to retreat and consolidate around $9,900/mt and 79,600 yuan/mt.

Fundamentally, this week saw the release of tender results from some miners, with trading volumes among traders remaining low, while smelter transactions showed signs of recovery. After entering September, higher copper prices temporarily suppressed short-term downstream consumption, leading to a small inventory buildup and softer spot premiums. Some smelters signaled production cuts, and overall, supply and demand maintained a weak balance. The impact of Document No. 770 was concentrated in Jiangxi Province this week, while other regions mostly remained in a wait-and-see mode.

Looking ahead to next week, the release of August CPI data from China and the US, along with the upcoming European Central Bank interest rate decision, is expected to increase the volatility of copper prices due to fluctuations in the US dollar. High copper prices have yet to stimulate peak season demand. It is anticipated that LME copper will fluctuate between $9,800-10,000/mt, and SHFE copper between 79,000-80,500 yuan/mt. In terms of spot, the continuous arrival of imported copper has been impacting premiums, while the capacity of processing companies to absorb it is limited. Spot prices against the SHFE copper 2509 contract are expected to range from a discount of 50 yuan/mt to a premium of 200 yuan/mt.