1、 Trend analysis
This week, copper prices first fell and then rose. As of September 18th, copper prices were reported at 110235 yuan/ton, an increase of 1.18% from the beginning of the week and a year-on-year increase of 37.72%.
LME copper inventory
According to data released by the London Metal Exchange (LME). LME copper inventory has slightly increased, with 255900 tons of LME copper inventory as of the weekend, up 5.4% from the beginning of the week.
Macroscopically, the probability of the Federal Reserve raising interest rates in September this week has risen to over 87%, and the center of gravity between US bond rates and the US dollar has shifted upward, which has formed a short-term pressure on copper prices. Although the new PMI orders of the domestic manufacturing industry are above the boom and bust line, fixed assets investment continues to decline, the momentum of domestic demand repair is weak, and the macro overall is empty. The negative correlation between copper prices and the US dollar has temporarily weakened, and the market’s pricing focus has shifted more towards the fundamentals of the industry itself.
Supply side: The spot TC of copper concentrate has fallen to a historical extreme low of about -210 US dollars/ton, and the shortage pattern in the mining side continues to deepen. Chile and Peru’s production recovery is weak, with a significant year-on-year contraction in domestic arrivals, and significant pressure on raw material costs for smelters. Spot smelting profits have deteriorated to a nearly one-year low, and domestic refined copper production in September is expected to decline more than expected due to raw material constraints. The supply side’s hard constraints provide medium-term support for copper prices.
Demand side: Downstream is gradually entering the peak season of “Golden September and Silver October”, with copper pole and cable operating rates rebounding month on month, but high copper prices have significantly suppressed traditional sectors. The investment in the power grid supports consumption, and the demand for copper in AI data centers and new energy is growing rapidly, forming a structural hedge. The differentiation of copper processing structures has intensified, with copper strips and foils continuing to grow rapidly, while traditional copper rods and tubes are relatively weak.
Influencing factors:
The core variable lies in the official decision of the US refined copper 232 tariff at the end of September. The market had previously bet on imposing tariffs, causing COMEX inventory to remain significantly high; If tariffs are implemented as scheduled, the tight supply situation in non US regions will continue; If it fails, there is a risk of a large amount of inventory outflow from the United States, which will have a negative impact on copper prices. The path of the Federal Reserve’s interest rate hike and the degree of fulfillment of domestic peak season demand also constitute a dual disturbance.
In summary, the deep negative value of TC in the mining sector constitutes a hard cost support for copper prices, and the low-level depletion of domestic social inventory strengthens the supply vulnerability of non US markets; However, the expectation of tightening macro liquidity and the uncertainty of tariff policies have suppressed the short-term volatility of copper prices, which is mainly determined by the game between the two. After the implementation of tariffs, the risk of low inventory in non US regions will be further highlighted, and the focus of copper prices is expected to gradually shift in the fourth quarter.
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