US Fed Cuts Interest Rate by 25 Basis Points as Expected, LME Copper Plunges Overnight [SMM Copper Morning Meeting Minutes]

Thursday, September 18, 2025

Futures: LME copper opened at $9,958/mt overnight, initially fluctuated downward to a low of $9,943.5/mt, then the center of copper prices continuously moved upward to a high of $10,013/mt, before fluctuating downward and finally closing at $9,974/mt, down 1.41%, with trading volume reaching 28,000 lots and open interest reaching 293,000 lots. Overnight, the most-traded SHFE copper 2511 contract opened at 79,980 yuan/mt, initially rose to 80,830 yuan/mt, then fluctuated downward to a low of 79,670 yuan/mt, before fluctuating upward and consolidating at high levels, finally closing at 79,880 yuan/mt, down 1.08%, with trading volume reaching 41,000 lots and open interest reaching 176,000 lots.

[SMM Copper Morning Meeting Minutes] News:

(1) On September 17, Orion Minerals announced a strategic agreement with its subsidiary Prieska Copper Zinc Mine Ltd to advance the Prieska Copper Zinc Mine (PCZM) project. The agreement includes financing of $200 million to $250 million and a purchase agreement for all copper and zinc concentrates from the mining area over the next 10 years. The project is expected to commence production in 2026 or 2027, with an annual production target of 30,000 mt for copper and 65,000 mt for zinc. The Prieska mine has resource reserves of 31 million mt, and the project's life cycle is expected to exceed 13 years. This project provides strong financial support for Orion Minerals and plans to further expand production scale, promoting mineral resource development in the South Africa region.

Spot:

(1) Shanghai: On September 17, SMM #1 copper cathode spot prices against the front-month 2510 contract were reported at a discount of 20 yuan/mt to a premium of 140 yuan/mt, with an average premium of 60 yuan/mt, down 15 yuan/mt from the previous trading day; SMM #1 copper cathode prices ranged from 80,410 to 80,790 yuan/mt. In the early session, SHFE copper fell continuously from 80,980 yuan/mt, repeatedly testing 80,420 yuan/mt after 10 a.m., before the futures reduced positions and rose to around 80,600 yuan/mt. The inter-month price spread was basically flat, and the import loss for front-month SHFE copper was nearly 500 yuan/mt. Looking ahead to today, the continued decline in copper prices did not immediately prompt downstream buyers to increase purchases. It is expected that downstream buyers will continue to drive down prices tomorrow, and spot premiums for SHFE copper may further decline.

(2) Guangdong: On September 17, Guangdong #1 copper cathode spot prices against the front-month contract were reported at a discount of 10 yuan/mt to a premium of 70 yuan/mt, with an average premium of 40 yuan/mt, flat from the previous trading day; SX-EW copper was reported at a discount of 70 yuan/mt to a discount of 50 yuan/mt, with an average discount of 60 yuan/mt, flat from the previous trading day. The average price of Guangdong #1 copper cathode was 80,645 yuan/mt, down 595 yuan/mt from the previous trading day, while the average price of SX-EW copper was 80,545 yuan/mt, down 595 yuan/mt. Overall, copper prices pulled back, and downstream users slightly increased procurement volume, but premiums remained flat from the previous day.

(3) Imported copper: On September 17, warrant prices were $50-60/mt, QP September, with the average price flat from the previous trading day; B/L prices were $50-62/mt, QP October, with the average price flat from the previous trading day; EQ copper (CIF B/L) was $20-30/mt, QP October, with the average price flat from the previous trading day. Quotations referred to cargoes arriving in late September and early October.

(4) Secondary copper: At 11:30 on September 17, the futures closing price was 80,600 yuan/mt, down 240 yuan/mt from the previous trading day; the average spot premiums/discounts were 60 yuan/mt, down 15 yuan/mt from the previous trading day. Today, the price of recycled copper raw materials fell 200 yuan/mt MoM. The price of bare bright copper in Guangdong was 73,800-74,000 yuan/mt, down 200 yuan/mt from the previous trading day. The price difference between copper cathode and copper scrap was 2,043 yuan/mt, down 42 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,095 yuan/mt. According to the SMM survey, as the US Fed's announcement on whether to cut interest rates in September approaches, copper prices rose significantly in the past few trading sessions amid strong market expectations for a 25 bp rate cut by the US Fed in September. After the positive news of the rate cut expectation was gradually digested, copper prices returned to normal. Suppliers of recycled copper raw materials continuously lowered procurement prices during the trading session and reduced shipments, leading to a noticeable decrease in circulating recycled copper raw materials in the market during the day.

(5) Inventory: On September 16, LME copper cathode inventories decreased by 1,175 mt to 149,775 mt; on September 17, SHFE warrant inventories decreased by 401 mt to 33,291 mt.

Prices: On the macro front, the US Fed cut interest rates by 25 basis points as scheduled, in line with general market expectations. However, some investors had expected the US Fed to signal the possibility of more aggressive rate cuts in the future, but this expectation was dashed by Chairman Powell's relatively "hawkish" stance. While defining this rate cut as a "risk management cut," Powell explicitly stated that "more aggressive rate cuts did not receive broad support" and reiterated that the impact of tariffs on inflation is only temporary. The dot plot showed the committee's median expectation for only a cumulative 75 basis points of rate cuts for the full year, lower than the easing expectations of some market participants. Immediately after the decision was announced, the US dollar index pulled back, but as Powell ruled out the possibility of more aggressive easing, the US dollar index rebounded sharply and closed up 0.37%. The strengthening US dollar index and the pullback in easing expectations put copper prices under pressure. On the fundamentals side, the spot market for copper cathode is currently well-supplied, with stable availability of both mainstream and non-mainstream brands. Although the pullback in copper prices released some delayed demand on the demand side, overall performance remained weak. Overall, the combined effects of macro pressure and loose fundamentals suggest that copper prices will continue to operate under pressure today.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution in their decision-making and not use it to replace independent judgment. Any decisions made by clients are unrelated to SMM.]