Strong Macro-Fundamental Resonance Drives LME Copper to Another Record High [SMM Macro Weekly Review]

Copper prices hit another record high this week, with LME copper fluctuating upward and reaching an intraday high of $11,952/mt on Friday, approaching the $12,000/mt mark. From a macro perspective, on one hand, the US core PCE continued to pull back and initial jobless claims rose significantly more than expected, further confirming the coexistence of declining inflation and weakening employment. On the other hand, the US Fed cut interest rates by 25 basis points as scheduled. Although some officials and the candidate chairman released hawkish signals, Trump publicly stated that "the rate cut was insufficient," strengthening market expectations for further easing. The US dollar index overall came under pressure and pulled back amid the resonance of policy and data, providing continuous support for copper prices.

On the fundamentals side, copper concentrate negotiations were still ongoing this week. Unlike previous years, some domestic and foreign trade long-term contract offers for copper cathode were released ahead of the copper concentrate TC long-term contract prices. Overall premiums saw a significant increase compared to 2025. Currently, spot and long-term contract expectations are quite divergent, highlighting the contradiction in expectations between upstream and downstream. On the demand side, suppressed by the rapid rise in copper prices, downstream enterprises turned cautious in procurement, resulting in weak transaction performance.

Looking ahead to next week, on one hand, expectations for a Bank of Japan rate hike are putting pressure on the US dollar index, and copper prices are expected to continue fluctuating upward. On the other hand, the copper concentrate TC long-term contract prices are expected to be finalized before Christmas, which will also support copper prices. LME copper is expected to fluctuate between $11,500/mt and $12,200/mt, while SHFE copper is expected to fluctuate between 91,500 yuan/mt and 95,500 yuan/mt. On the spot side, year-end market demand performed weakly, and downstream orders were weak due to high copper prices. Spot prices against the SHFE copper 2512 contract are expected to range from a premium of -120 yuan/mt to a premium of 100 yuan/mt.