Weekly Copper Prices Reached 80,000 yuan/mt Again, Downstream Operations Under Pressure and Below Expectations [SMM Macro Weekly Review]

Copper prices hovered at highs this week, with expectations of macro easing and weak fundamental consumption creating a tug-of-war. US nonfarm payrolls for August fell significantly short of expectations, the unemployment rate hit a four-year high, and employment revisions indicated clear labor market weakness, prompting markets to strengthen bets on a US Fed interest rate cut in September. PPI came in well below expectations, CPI rebounded slightly but core remained stable, and initial jobless claims hit highs, tilting expectations toward three rate cuts within the year. The US dollar pulled back under pressure, providing sustained support for copper prices. Meanwhile, Trump pressured the Fed to accelerate easing, further boosting market sentiment. Geopolitically, the Russia-Ukraine conflict, Middle East tensions, and dynamics of EU-US sanctions maintained risk premiums. LME copper rose sharply this week, breaking through the $10,000/mt level. SHFE copper also climbed above 80,000 yuan/mt.

Fundamentally, end-use consumption weakened noticeably this week as copper prices surged, with the expected peak season in September failing to materialize. Operating rates for copper semis fell short of expectations. On the supply side, the impact of Document No. 770 remained concentrated in Jiangxi, while operating rates for copper scrap rebounded in other regions. Spot premiums continued to decline this week but showed strong resilience near parity. The market still holds expectations for a rebound in premiums in Q4. However, current consumption lacks support, and continued arrivals of imported copper are pressuring premiums, making them more likely to fall than rise in the near term.

Looking ahead to next week, a US Fed rate cut in September is largely priced in, and geopolitical disturbances may pressure LME copper on the upside. LME copper is expected to fluctuate between $9,900/mt and $10,100/mt, while SHFE copper may trade between 79,500 yuan/mt and 81,000 yuan/mt. On the spot side, next week marks the last trading day for the SHFE copper 2509 contract. Liquidity for high-quality copper remains tight, and arrivals of imported copper are expected to decrease compared to late August. With both supply and demand weak, spot premiums are expected to hold steady with fluctuations, and the price spread is likely to narrow WoW. Spot prices against the SHFE copper 2509 contract are expected to range from a premium of 20 yuan/mt to 180 yuan/mt.