Copper prices show an “N” shaped trend in August

1、 Trend analysis

According to monitoring data from Shengyi Society, copper prices showed an “N” shaped trend in August. At the beginning of the month, the copper price was 78371.67 yuan/ton, and at the end of the month, the copper price rose to 79585 yuan/ton, with an overall increase of 1.55% and a year-on-year increase of 6.23%.
According to the current chart of Shengyi Society, the spot price of copper in August was basically higher than the futures price, and the main contract is the expected price two months later. The expected future price may be under pressure.
According to LME inventory, LME copper inventory slightly increased in September. As of the end of the month, LME copper inventory was 155000 tons, up 9.35% from the beginning of the month.
Macroscopically, the market has very strong expectations for the Fed’s September interest rate cut, with a probability of approaching 90% or even 95% at one point. Powell’s speech at the Jackson Hole Global Central Bank Annual Meeting was interpreted as dovish, reinforcing this expectation. At the end of July, the US “232″ investigation was launched, and the results showed that no tariffs would be imposed on refined copper, but a 50% tariff would be imposed on copper and other products. This policy has become relatively clear, reducing its short-term disturbances.
Supply side: Codelco in Chile has lowered its 2025 production forecast to 1.34-13.7 million tons (approximately 30000 tons lower than the March forecast). The Escondida copper mine in Chile (accounting for 5% of the global production) has reduced production by 15% due to rainstorm. The land transfer of a large copper mining development project in Arizona, USA, has been temporarily blocked. The refined copper production in July was 1.27 million tons, a decrease from the record breaking 1.3 million tons in June. The refined copper production in July was 1.27 million tons, a decrease from the record high of 1.3 million tons in June. The import volume of recycled copper decreased year-on-year (by 2.36% in July), and the price difference between refined and scrap narrowed, resulting in import losses.
Downstream: Although facing the drag of the real estate industry, the investment plan for the power grid has exceeded 825 billion yuan (year-on-year growth), and the new energy sector (photovoltaics, wind power, new energy vehicles) maintains high growth rates, all of which provide a solid foundation for copper demand. The production of household air conditioners in July was slightly better than expected.
According to the annual price comparison chart of Shengyi Society, in the past five years, copper prices have risen more or fallen less in September, and there is a high probability that copper prices will rise in September this year.
In summary, this month, there have been frequent disruptions in global copper mine supply, pressure on China’s smelting sector due to extremely low processing fees, and overall low domestic inventories in China. The supply side has shown a pattern of “tightening at the mining end and regional tension in refined copper supply”. In terms of demand, the demand in the power grid and new energy sectors remains strong, while traditional real estate is weak. The peak consumption season of “Golden September and Silver October” is approaching, but attention should be paid to the failure or less than expected magnitude of the Federal Reserve’s interest rate cuts. It is expected that copper prices will mainly fluctuate and become stronger.