Copper Prices Retreat After Rapid Rise During the Week, Sluggish Fundamentals and Weak Consumption [SMM Macro Weekly Review]

Copper prices retreated after a rapid rise this week. LME copper fluctuated upward early in the week, breaking through $13,400/mt, but upward momentum weakened subsequently, pulling back slightly to around 12,800 yuan/mt by the week's end. SHFE copper also pulled back near the 100,000 yuan/mt mark. Macro perspective, after US tariff concerns eased, market focus shifted to economic data. Strong initial jobless claims data, coupled with multiple US Fed officials intensively stating that fighting inflation remains the top priority, policy will remain tight, and the likelihood of near-term interest rate cuts is low, supported a US dollar gain, putting pressure on copper prices. Domestically, positive support emerged as State Grid's fixed-asset investment during the 15th Five-Year Plan period is projected to reach 4 trillion yuan, providing demand-side support.

Fundamentals, annual long-term contract negotiations for copper concentrates progressed slowly, with spot TC lingering at low levels. High copper prices led to significant inventory buildup domestically, with the inventory base increasing substantially YoY. The SHFE copper nearby structure shifted to a high contango, with spot prices at a significant discount. As the price spread between LME and COMEX nearby contracts narrowed, some traders closed previously locked positions and offloaded spot cargo, leading to the appearance of some COMEX-registered brand B/Ls in the offshore market. Concurrently, some offers emerged for small semi-annual or quarterly long-term contracts for 2026, and net imports are expected to increase slightly compared to previous expectations.

Looking ahead to next week, the macro front is expected to be generally quiet, while geopolitical tensions and precious metal price movements will continue to guide copper prices. Currently, copper prices appear to have limited upward momentum. LME copper is forecast to fluctuate between $12,400/mt and $13,000/mt, while SHFE copper is expected to trade between 98,500 yuan/mt and 101,000 yuan/mt. Spot side, the off-season atmosphere before the Chinese New Year is beginning to show, with high inventories continuing to pressure premiums. Spot prices against the SHFE copper 2602 contract are expected to range from a discount of 300 yuan/mt to a premium of 50 yuan/mt.