Last week (September 14th - September 18th), the copper market showed a trend of "initial suppression followed by recovery and stabilization", with the price center slightly rising compared to the previous week. At the beginning of the week, due to the approaching Federal Reserve interest rate meeting, the probability of a September interest rate hike rose to nearly 90%, the upward trend of US Treasury yields and the US dollar index exerted pressure, coupled with the unresolved US refined copper tariffs, the breakdown of the tariff hoarding logic and the continuous escalation of the Middle East geopolitical situation, the copper price fluctuated at a high level and slightly dropped by 60 US dollars/ton; subsequently, the probability of an interest rate hike before the meeting rose to 60%, the 110,000 yuan threshold was effectively broken through, and on September 15th, it dropped by 1,260 US dollars/ton. In the later part of the week, the copper price stopped falling and stabilized, rebounding by 395 US dollars/ton on September 16th; after the Fed raised interest rates by 25 basis points as expected on September 17th, the copper price showed strong resistance and stabilized at a high level, rising by 665 US dollars/. After the interest rate hike shoe was dropped on September 18th, the market gradually digested the hawkish expectations, the negative factors were exhausted, and the non-ferrous metals sector witnessed a rebound and repair, with the copper price surging by 230 US dollars/ton. Finally, it closed at 16,500 US dollars/ton, rising by 180 US dollars/ton compared to the previous Friday (September 11th, 16,320 US dollars/ton).
【Stabilizing and Rising, All Negative Factors Exhausted】
This week, the copper price stabilized and rose. The main driving force came from the "macroeconomic interest rate hikes and tariff policy disturbances" and the "tightness in the mining sector combined with the strong reality of pre-holiday stockpiling and the recovery of demand" in the market. On the macro front, the upcoming Federal Reserve interest rate meeting (September 17th) was the most crucial variable this week. The probability of an interest rate hike in September rose to nearly 90%, and the upward movement of US Treasury yields and the US dollar index put pressure on the copper price. After the unexpected increase in PPI and core CPI in August, the expectation for an interest rate hike significantly intensified, and the 10-year US Treasury yield broke through the 5% threshold. The US refining copper tariff policy remained unresolved, and the uncertainty before the decision window on September 28th continued to disturb the market. The logic that pushed the copper price to rise significantly before was greatly weakened. The continuous escalation of the Middle East geopolitical conflict, the ongoing US-Iran conflict, the capture of strategic locations in the Mender Sea by the Houthi armed group, and the increased volatility of crude oil have intensified market sentiment. On September 17th, the Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00%, and the dot plot showed that there might be another interest rate hike this year. However, the market gradually digested the hawkish expectations, and the US dollar index strengthened, resulting in a resilient performance of the copper price. After all negative factors were exhausted, a rebound and correction occurred.
On the supply side, the tightness in the mining sector is the core support. The copper concentrate TC in China reached an all-time high, while the TC of imported copper concentrate remained at an all-time high. The decline in sulfuric acid prices further squeezed the profit margins of smelting. The release of production capacity was restricted, and the supply increase was also limited. The restructuring plan of Chile's National Copper Company (Codelco) might be delayed until the end of 2026. The problem of production stagnation and cost increase is difficult to solve in the short term. The export ban on copper and cobalt concentrate from the Democratic Republic of the Congo has continued to intensify, and the supply constraint from the mining sector remains. The country's copper exports reached a record high of 1.72 million tons in the first half of the year, but the impact of the export ban has gradually emerged. The inventory side showed marginal changes before returning to normalization. On September 15th, the domestic social inventory rose to 90,300 tons, increasing by 0.52 million tons compared to the previous week. The short-term spot market shifted from "extremely tight" to "marginal easing". On September 18th, the inventory side continued to decline, with a weekly reduction of 0.12 million tons. However, the underlying pattern of tight inventories in non-US regions remained unchanged. The demand side showed positive changes but was still mainly driven by strong demand. "Golden September" has not fully started yet. The high copper price has suppressed downstream inventory preparation, and the production of cables has weakened, the new orders for enameled wire have declined, and the terminals have mainly conducted transactions based on strong demand. After the copper price correction, there was a small amount of pricing for replenishment. In the later part of the week, as the double festival approaches, downstream started pre-shipment preparations, and buying demand improved. The purchasing sentiment in Shanghai improved compared to the previous week. The premium of copper in Yangshan rose to a nearly four-year high, reflecting strong spot purchasing demand in China. The long-term demand expectations for power grids, new energy, and AI data centers are positive.
In terms of institutional views, Everbright Futures is short-term cautious and bearish, believing that the tariff logic has changed. Huatai Futures maintains a cautious and bullish judgment, believing that copper prices will perform well against the odds under the background of Fed interest rate hikes, with relatively strong fundamentals and the start of pre-shipment preparations by the downstream. Guotai Junan believes that the domestic fundamentals are relatively strong, limiting the decline and providing a stable and oscillating trend. SMM believes that the supply is still tight but the demand has seen marginal recovery, and the short-term copper price is weak. Business Social believes that the short-term trend is downward. Guoxin Futures pointed out that after the US interest rate hike, the negative pressure on the copper sector has been released and gradually rebounded. The high premium, tight balance, and the waiting for the realization of the peak demand provide strong real support for the copper price. Changjiang Futures is bullish on the medium and long-term trend of copper prices, believing that the copper price will reach a new high in 2026.
Overall, this week, copper prices completed the transition from "rising and then falling" to "stabilizing and rising" after the landing of the Fed interest rate hike and the exhaustion of negative factors. In the short term, the final landing method of the US tariff policy and the geopolitical trend remain the main sources of fluctuation. The supporting logic at the industrial level remains solid: the tight supply situation in the mining sector has not changed, the TC remains at an all-time high, the Codelco restructuring is delayed, the export ban from the Democratic Republic of the Congo has continued to intensify, the inventory has returned to normalization, and the premium of copper in Yangshan has risen to a nearly four-year high. The pre-shipment preparations before the festival provide bottom support. However, the high copper price has suppressed downstream purchases, and the production of cables and enameled wire is still at a low level, limiting the upward space. It is expected that copper prices will present a strong and volatile pattern with macro negative factors being digested and the industrial fundamentals providing support. In the medium and long term, the tight supply in the mining sector and the supply-demand gap will provide continuous support. Subsequently, attention should be focused on: the final landing method of the US refined copper tariff policy (the decision window on September 28th), the subsequent interest rate hike path of the Fed, the development of US-Iran and Middle East geopolitical situations, the domestic electrolytic copper inventory de-accumulation rhythm and the premium of copper in Yangshan, the downstream pre-shipment preparations and the demand承接 situation.