Copper prices dropped in China's futures and spot markets on September 2, while slightly rebounded at the LME. Macro factors were mixed, while the copper market fundamentals remained supportive, leading recent copper prices to keep fluctuating at elevated levels.
China's refined copper spot trading improved on September 2. As copper prices pulled back and the near-month Back structure spread widened further, copper holders showed increased willingness to sell at lower prices, leading to a notable decline in spot premiums. Some downstream enterprises took advantage of the price dip to procure, resulting in a modest recovery in overall transaction volumes. In contrast, copper scrap trading dropped, with upstream scrap holders unwilling to sell at low and downstream processors waiting for further price declines.
Trading in China's copper semis markets recovered on September 2, as falling raw material prices boosted downstream procurement. Overall, peak-season expectations, combined with falling copper prices, provided a temporary boost to downstream procurement. However, growth in end-user orders remained limited, with bargain-hunting restocking likely to continue to dominate in the short term.
Moving forward, recurring tensions in the Middle East and hawkish remarks by Warsh may push the U.S. dollar index higher, weighing on non-ferrous metals prices. However, the released RatingDog manufacturing PMI rose to 51.5, and China's official manufacturing PMI also remained in expansionary territory. Combined with the new real estate credit policy reforms, expectations for non-ferrous metals consumption is showing signs of marginal improvement.
