Weak Fundamentals Weigh on Copper Price

Several US Fed officials spoke in the week ending June 28, maintaining a hawkish stance on future rate cuts. The US dollar index rose above 106 points. However, the market still expects a rate cut in September given the recent weak performance of US employment data, with CME Fedwatch showing a 57.9% probability of a rate cut in September. In China, the third plenary session of the 20th Communist Party of China (CPC) Central Committee will be held from July 15 to 18. The rise in the US dollar index put continuous pressure on LME copper during the week, with prices once falling to $9,485.5/mt. SHFE copper also fell to around 77,000 yuan/mt, but support remained strong.

Fundamentals side, Antofagasta and some Chinese smelters finalised the 2025 long-term contract TC for Cu 50% copper concentrate at $23.5/mt. As global smelting capacity ramps up, the future supply of copper concentrate may become tighter. LME copper inventories continued to increase, breaking through 177,500 mt, pushing the SHFE/LME copper price ratio to recover. During the LME Week, the copper import market was quiet. The domestic spot market was also quiet, and as the half-year settlement approached, market liquidity decreased. After trading with next-month invoices, spot premiums were high, putting pressure on downstream demand. In the week of July 1, multiple countries will release June manufacturing PMI data. With negative feedback from fundamentals, copper prices will still face significant pressure. The continued increase in LME copper inventories may further push the SHFE/LME copper price ratio to recover. LME copper is expected to trade between $9,500-9,900/mt, and SHFE copper between 77,000-80,000 yuan/mt. In the spot market, copper prices will remain under pressure with end-user demand slowly recovering in July, but supply will also gradually increase as domestic smelters’ maintenance ends. After the SHFE/LME price ratio recovers, export volumes are expected to decrease. The inventory pressure remains high. The discount for spot copper against the SHFE 2407 contract is expected to be between 200 yuan/mt and 50 yuan/mt.

The model predicts the price range for the most-traded copper contract from Thursday June 27 to Wednesday July 3 to be [76,345, 80,315] yuan/mt, with an average of 78,330 yuan/mt. The extreme price range is [74,890, 81,400] yuan/mt, the normal price range is [75,860, 80,680] yuan/mt, and the conservative price range is [76,830, 79,950] yuan/mt. The price trend is expected to be sideways or weak fluctuations. The support range is [75,860, 76,830] yuan/mt, and the resistance range is [79,950, 80,680] yuan/mt.