Copper prices are under pressure and fluctuating, and the risk of global market oversupply is intensifying

The Federal Reserve cut interest rates by 25BP as scheduled, but the path of interest rate cuts in 2025 continues to tighten. Powell believes that the current economic growth has been significantly suppressed, and the direction of interest rate cuts will not change. However, due to the resilience of inflation, the pace of interest rate cuts is still strong. After the meeting, the US dollar index surged significantly. The economic pressure caused by the escalation of global trade frictions has not yet eased, and the Eurozone PMI has fallen to a new low this year. Overseas demand expectations are under pressure; Although the domestic economy has rebounded on a month on month basis, the path of recovery remains uncertain, resulting in a lack of resonance between the Chinese and American economies, and the performance of copper prices is relatively uncertain.

From a fundamental perspective, negotiations on processing fees for some long orders have landed, and prices have further fallen to $21.25 per ton compared to the middle of the year. This will result in a significant reduction in profits for smelters next year compared to this year, putting pressure on new production capacity to go online and capacity to climb, and putting pressure on cash flow. On the demand side, the inversion of scrap copper raw materials has led to a favorable price difference for refined copper consumption, with overall consumption remaining stable. Domestic social inventory has been depleted, and spot prices have maintained a slight upward trend. However, globally, the copper market still tends to be surplus, and the digestion of surplus is slow. The pressure of overseas macro expectations has increased, and copper prices remain under pressure, with a risk of breaking through.