Long-term contract negotiations face sharp conflicts, copper prices continued to rise within the week [SMM Macro Weekly Review]

Copper prices generally held up well at high levels this week. LME copper repeatedly tested the $11,000/mt level and broke through after the Asian market close on Friday, while SHFE copper stabilized in the range of 86,000–87,500 yuan/mt. From a macro perspective, dovish remarks from US Fed officials, weakening US economic data, and rising market expectations for a December interest rate cut supported the continued rise in copper prices this week. Additionally, the Fed's Beige Book indicated sluggish US economic activity and polarized consumption, reinforcing expectations for monetary easing. Geopolitically, progress in US-Russia negotiations on a peace framework for Ukraine led to a temporary easing of market risk aversion. Disappointing retail and employment data caused the US dollar index to retreat from highs, further boosting copper prices.

On the fundamentals side, a major industry conference was held in Shanghai, but trading sentiment in the spot market was sluggish. Market focus was largely on long-term contract negotiations. The conclusion of long-term contracts for copper concentrates remained pending, while long-term contracts for copper cathode registration were generally closed at over $300/mt, hitting a multi-year high. Domestically, inventory continued to draw down during the week, and December consumption showed signs of picking up. However, the high copper prices continued to suppress downstream demand, limiting the increase.

Looking ahead to next week, signals for a US interest rate cut within the year became clearer, while concerns about a domestic economic slowdown increased. LME copper is expected to fluctuate between $10,800/mt and $11,050/mt, and SHFE copper between 86,500 yuan/mt and 88,500 yuan/mt. In the spot market, high copper prices are suppressing the premium. Spot prices against the SHFE copper 2512 contract are expected to range from a premium of 10 yuan/mt to a premium of 250 yuan/mt.