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In terms of macroeconomics, earlier this week, Trump officially took the oath of office. His initial tariff policy decisions temporarily eased market sentiment. Although the market remains concerned about subsequent uncertainties, his current mild stance has alleviated fears of a new round of trade wars. The US dollar index declined in the short term, driving copper prices higher. Meanwhile, the US Fed is highly likely to hold rates steady at its January meeting, and the strong US dollar trend may persist in the short term, with high US Treasury yields exerting pressure on equity assets. Despite marginal cooling in inflation, the risk of an inflation rebound remains, leading to a cautious market sentiment. The European Central Bank plans to continue cutting interest rates. Uncertainties in inflation and growth, particularly potential trade frictions under Trump’s administration, pose potential risks to the Eurozone economy. In Japan, the Bank of Japan plans to raise the policy rate by 25 basis points to 0.5% this Friday. A weak yen has contributed to inflation stickiness. Overall, international interest rate differentials continue to narrow. This week, the center of commodities shifted upward, with LME copper rising from $9,150/mt to around $9,300/mt. In China, the continued expansion of domestic demand alongside counter-cyclical adjustment policies has led to a stable and improving fundamental trend. SHFE copper rose from 75,000 yuan/mt to around 75,700 yuan/mt during the week, with relatively small overall fluctuations.
On the fundamentals side, the copper concentrate market remained active this week, with transaction prices for smelters' TC from some mines dropping to around $0/mt. For copper cathode, the import arbitrage window in the US dollar copper market remained tightly closed this week. Suppliers gradually shifted their offers to cargoes arriving in later months, but due to the slow pace of long-term contract deliveries and the approaching Chinese New Year, the actual market performance was subdued. In domestic trade, logistics gradually paused ahead of the Chinese New Year, and the trading sector also became increasingly quiet this week, with spot premiums continuing to decline. Looking ahead to next week, the US Fed is highly likely to hold rates steady at its January meeting, but under the pressure of Trump’s administration’s eagerness for interest rate cuts, the US dollar index still has downside room. The European Central Bank’s rate cut is almost certain, providing strong short-term support for copper prices at the bottom. LME copper is expected to fluctuate within the range of $9,250-9,350/mt, while SHFE copper, with only one trading day next week due to the Chinese New Year holiday, is expected to see the most-traded contract fluctuate within the range of 75,500-76,500 yuan/mt. In the spot market, spot transactions are expected to be notably quiet next week, with almost no market circulation. Spot prices against the SHFE copper 2502 contract are expected to remain in the range of a discount of 100 yuan/mt to a discount of 50 yuan/mt.
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