The US Fed's subsequent interest rate cut path remains relatively conservative, and copper prices surged before pulling back again within the week [SMM Macro Weekly Review].

Copper prices retreated after a rapid rise this week. At the beginning of the week, driven by expectations of a US interest rate cut, geopolitical tensions, and the suspension of Freeport Indonesia's copper mine, macro and supply disruptions resonated, with LME copper once breaking through $10,190/mt and SHFE copper reaching 81,500 yuan/mt. Market optimism about the US Fed's interest rate cut also provided significant support. However, the Fed's meeting only cut rates by 25 basis points, and Powell emphasized it was a "risk management" move, ruling out the possibility of significant easing. The dot plot indicated limited cumulative rate cuts for the year, significantly cooling market expectations for easing. The US dollar index first fell and then strengthened, putting copper prices under pressure and causing a mid-week pullback. In China, August CPI and PPI data showed mild contraction, but policy support remained strong, with continued easing in property policies providing a floor for copper prices. This week, LME copper fluctuated between $9,900-10,100/mt, while SHFE copper maintained a range of 79,500-81,000 yuan/mt.

Fundamentally, mine tenders were scarce this week, and the spot market for copper concentrates was sluggish. Due to the sharp rise in copper prices at the beginning of the week, downstream consumption performed poorly, and smelters in north China made significant transfers to delivery warehouses. After copper prices fell mid-week, consumption improved, but premiums and discounts in east and south China did not follow the increase. Downstream entities were active in point pricing but slow in cargo pick-up.

Looking ahead to next week, after the Fed meeting, copper prices face weak support at high levels, but domestic policy benefits continue to be released, providing strong underlying support for overall demand. LME copper is expected to fluctuate between $9,850-9,950/mt, and SHFE copper between 79,000-79,500 yuan/mt. On the spot side, pre-National Day stockpiling demand is expected to emerge, and a large number of earlier point-priced orders may increase cargo pick-up pressure, with spot premiums expected to rise. Spot prices against the SHFE copper 2510 contract are expected to range from parity to a premium of 250 yuan/mt.