China-U.S. Talks Release Positive Signals, Copper Prices Surge to Break Historical Highs [SMM Macro Weekly Review]

This week saw frequent macro developments. Positive progress in China-US economic and trade consultations in Malaysia, the extension of reciprocal tariffs and a reduction in fentanyl tariffs boosted trade sentiment, pushing LME copper above the $11,000/mt mark. Mid-week, the US Fed cut interest rates by 25 bps as expected, sustaining market optimism, while anticipated talks between Xi Jinping and Trump in Busan further bolstered risk appetite. However, month-end hawkish remarks from Powell following the meeting hinted that the rate-cut cycle may be nearing its end, coupled with marginally weaker PMI data and a strong US dollar rebound, putting copper prices under pressure and leading to a pullback. Overall, expectations of macro easing and supply constraints continued to support prices, with LME copper trading at $10,800-11,150/mt and SHFE copper at 87,000-89,500 yuan/mt.

On the fundamentals side, this week, a spokesperson for Indonesia's Energy Ministry stated on Tuesday that the government has agreed to issue a copper concentrate export permit to PT Amman International Mining, with the permit currently undergoing administrative procedures and an expected quota of 400,000 mt of ore. Meanwhile, PT Amman's smelter entered maintenance due to production equipment failure. Late in the week, Dar es Salaam port was officially closed due to geopolitical reasons, with no staff on site and all cargo port operations suspended, leading to expected delays in current shipments. November copper cathode imports are projected to decline significantly. Domestically, downstream demand remained sluggish, with spot premiums continuing to fall. However, overall inventory held steady, supported by exports.

Looking ahead to next week, on the macro front, trade tensions show signs of easing following China-US talks; if final October PMI data mostly indicate contraction, copper prices will lack strong support. LME copper is expected to fluctuate between $10,600-10,950/mt, and SHFE copper between 85,500-88,000 yuan/mt. On the spot side, domestic demand remains weak, and premiums are expected to hold steady with this week after transactions for cargoes with invoices dated this month. Spot prices against the SHFE copper 2511 contract are anticipated to range from a discount of 100 yuan/mt to a premium of 100 yuan/mt.