Copper prices fluctuated at high levels this week (August 10-14)

1、 Trend analysis

This week, copper prices first rose and then fell. As of August 14th, copper prices were reported at 108103.33 yuan/ton, up 0.08% from the beginning of the week and up 35.96% year-on-year.
LME copper inventory
According to data released by the London Metal Exchange (LME). LME copper inventory has slightly decreased, with 207725 tons of LME copper inventory as of the weekend, a decrease of 4.8% from the beginning of the week.
Macro wise: This week’s macro sentiment first suppressed and then rose. At the beginning of the week, the market continued to digest the US non farm payroll data that fell short of expectations, and the expectation of the Federal Reserve raising interest rates eased slightly; During the week, there was an increase in hawkish voices within the Federal Reserve, and concerns about interest rate hikes escalated; At the end of the week, the US July CPI increased by 3.4% year-on-year, and the core CPI fell to 2.5%. After confirming the cooling of inflation, the probability of a rate hike in September dropped sharply to about 70%. The weakening of the US dollar directly benefits the financial pricing of copper. Domestically, the manufacturing PMI in July has fallen below the boom bust line, and domestic demand momentum continues to be weak.
Supply side: The shortage pattern in the mining sector continues to deepen, and the spot processing fee (TC) for copper concentrate has fallen to a deep negative range, hitting a record low of negative $175.7 per ton on August 7th. Due to severe shortages of raw materials, China’s refined copper production in August is expected to be 1.05 million tons, a year-on-year decrease of 2.83%, marking the second consecutive month of year-on-year decline; In July, domestic electrolytic copper production decreased by 1.59% month on month, mainly due to difficulties in purchasing waste anode plates and centralized maintenance of smelters. The ban on the export of copper concentrate from the Democratic Republic of Congo has disrupted the market, but its actual impact is limited.
On the demand side: This week is in the off-season of traditional consumption, and high copper prices have significantly suppressed downstream procurement. The operating rate of domestic copper rod enterprises is only 59.3%, and terminals such as cables and enameled wires are continuously suppressed by high copper prices; The spot price of Shanghai copper has rapidly shifted from premium to discount, and the price of flat copper has dropped to around 300 yuan/ton discount. Downstream purchases are mainly made at low prices due to strong demand, and there is a lack of willingness to chase after high prices. However, the demand for emerging industries remains resilient, and the year-on-year increase of 12.6% in power grid investment provides structural support for copper consumption.
Influencing factors: The inventory side shows significant differentiation – LME copper inventory has been declining for 42 consecutive trading days, setting a record for the longest continuous destocking since 2014; COMEX inventory continued to increase to approximately 666000 tons, reflecting the siphon effect of North American cargo grabbing. The US tariff policy is undecided, and the market is waiting for whether to announce the imposition of tariffs on copper before the end of September. In addition, the rebound in demand for AI is seen by the market as an important driving force behind this round of price increases, reshaping the medium and long-term demand logic of the copper market.
In summary, copper prices have fluctuated at a high level in the macro and fundamental long short game this week, with extremely low inventory and scarce minerals forming a solid bottom. However, weak consumption during the off-season and high copper prices have suppressed upward elasticity. Looking ahead to next week, copper prices are expected to remain strong.