Weak Manufacturing Data in October Led to a Brief Decline in Copper Prices Before Consumption Picked Up [SMM Macro Weekly Review]

Copper prices were generally in the doldrums this week. Earlier, divisions within the US Fed over the policy path widened, with some governors arguing that tariffs had not significantly pushed up inflation and favoring an interest rate cut within the year, while most officials insisted on maintaining restrictive policies to curb inflation. Market expectations for a December interest rate cut pulled back to around 50%, the US dollar index rebounded, and coupled with weak manufacturing data, copper prices pulled back significantly from previous highs. Later, the US Supreme Court raised questions about the legality of the Trump administration's reciprocal tariff policy, and concerns over a government shutdown eased. The US dollar fluctuated at highs, and copper prices stabilized briefly. This week, LME copper traded between $10,550 and $10,900/mt, while SHFE copper generally moved between 85,000 and 87,500 yuan/mt.

On the fundamentals side, trading of copper concentrates was relatively sluggish this week, with spot TC holding steady compared to previous levels. Two major African copper-exporting countries reopened key trade routes. The freight border between Tanzania and Zambia has reopened, but port efficiency remains slow. Domestically, as copper prices declined, downstream willingness to fix prices recovered, and sentiment for cargo pick-up warmed up compared to before. Spot premiums bottomed out and rebounded during the week. However, overall inventory continued to build. Q4 consumption still lacks momentum from the current perspective.

Looking ahead to next week, on the macro front, the US government shutdown cycle is not yet over, lacking guidance from multiple macroeconomic data points. However, if the Trump administration's reciprocal tariff policy is ruled illegal, the US foreign trade situation may ease somewhat. Copper prices lack short-term upward momentum. LME copper is expected to fluctuate between $10,550 and $10,850/mt, and SHFE copper between 85,000 and 87,500 yuan/mt. On the spot side, domestic consumption demand recovered. There remains a significant delivery gap in the power grid sector in Q4, and end-use demand shows relatively strong resilience. Spot prices against the SHFE copper 2511 contract are expected to range from a discount of 40 yuan/mt to a premium of 120 yuan/mt.