〔Overnight Brief〕Fed Hike Odds Lift to ~70% and US Tariff Plan Stalls as SHFE Copper Drops 2.45% to 108,990 Yuan, While LME Holds $14,240/t and Citi Anchors $15,000/t — Macro Repricing vs Supply Squeeze Split

0. Weekly Arc

The dovish-bullish trade that carried metals into early September broke overnight as Fed September hike odds lifted from ~60% to ~70% on US-Iran tensions, hotter US PPI, and the ECB's second 2026 hike, dragging SHFE copper's main contract down 2.45% to 108,990 yuan ^[1]. Yet LME copper closed up $6 at $14,240/t ^[2] and Citi reiterated a $15,000/t 0-3 month target ^[3], while Codelco July output fell 5% y/y and Escondida plunged 22.1% ^[4]. Net: macro repricing punished SHFE while the LME supply-tightness story held — a divergence that decides the next leg ^[2][1][3][4].

1. Copper: The Mechanism

• **[ESCALATED] Rate-hike repricing:** Fed Sept hike odds lifted from ~60% to ~70% on US-Iran escalation, US August PPI upside surprise, and the ECB's second 2026 hike ^[1]. DXY and US Treasury yields rose, dragging the broader metals complex ^[1].
• **[NEW] US copper tariff plan stalls:** SMM reported that Washington's plan to impose tariffs on metal imports has stalled, sending the C-L premium sharply lower and removing a key support that had been pulling global copper flows into the US ^[1].
• **[ONGOING] SHFE-LME divergence:** LME copper closed up $6 at $14,240/t even as SHFE main contract fell 2.45% to 108,990 yuan ^[2][1]. The split is the trade.
• **[NEW] Citi reiterated copper target at $15,000/t for the 0-3 month horizon ^[3]**.
• **[NEW] Equity fallout:** Northern Copper (北方铜业) hit the daily limit down at 14.74 yuan/share, -10.01%; the company said the drop is partly tied to international copper price weakness, that it sources raw material via long-term contracts with major traders, and that overseas mine acquisition is under consideration but no specific target exists with valuations high ^[5].

2. Lithium: Demand Story vs Price Action

• **[ONGOING] Carbonate price weakness:** Lithium carbonate prices fell on multiple headwinds and are approaching the yearly low ^[6].
• **[NEW] Shengxin Lithium Energy (盛新锂能) view:** At the Sichuan investor day, the company said the lithium salt market remains in a sustained growth process, but supply-demand is dynamic; the future balance depends on terminal demand growth, industry inventory changes, the release pace of new resource projects, and the capacity expansion progress of existing projects ^[7].
• **[NEW] Recycling milestone:** A retired lithium battery recycling project in Xinyu (新余), built by Jiangxi Longkai Recycling Technology (江西龙凯循环科技), began phase 1 production in August; designed for 120,000 t/yr at full build with lithium recovery over 95% and battery-grade lithium carbonate purity above 99.6% ^[8]. First-year revenue targeted above 500 million yuan; total project investment 600 million yuan on ~252 mu, with full-completion output targeted at 4 billion yuan ^[8].

3. Supply Fundamentals: Tight Despite the Macro Selloff

• **[NEW] Chilean output extended weakness:** Codelco's July output fell 5% y/y to 112,800 metric tons per Cochilco; BHP-controlled Escondida, the world's largest copper mine, slumped 22.1% to 89,400 tons ^[4].
• **[NEW] Africa processing pivot:** The continent is seeking processing-capacity upgrades and supply-chain reshaping to capture surging demand for energy transition metals ^[9].
• **[NEW] Congo cobalt trade:** Turkish trader BGN is looking to buy battery-material cobalt from the Democratic Republic of Congo, which produces ~70% of global cobalt and hosts CMOC and Glencore; DRC has banned concentrate exports but processed hydroxide still flows under quotas ^[10].
• **[ONGOING] Industrial-metals trade framing:** The Greater Bay Area and broader south-China copper ecosystem is being repositioned as a smart warehousing and logistics hub for global copper flows, per SMM's 2026 South China Nonferrous Metals Annual Congress copper forum, with Minmetals Logistics Park (Dongguan) Chairman Wang Wei presenting the platform ^[11].

4. Other Metals: Broad LME Weakness, SHFE Losses Across the Board

• **[NEW] Overnight SHFE session closed red across the complex:** SHFE copper -0.20%, aluminum -0.79%, zinc -0.95%, lead -0.68%, nickel -0.89%, tin -2.35%, alumina -2.12%, aluminum alloy -0.75%, stainless steel -0.84% ^[12].
• **[NEW] LME close mixed:** LME aluminum -$40 at $3,253/t, zinc -$11 at $3,881/t, lead -$9 at $1,892/t, nickel -$197 at $16,469/t, tin -$980 at $53,364/t, cobalt -$530 at $41,850/t; only copper closed higher, +$6 at $14,240/t ^[2].

5. Policy and Source Notes

• **[NEW] Carbon market expansion:** The Ministry of Ecology and Environment issued the carbon allowance allocation scheme for power (2025, 2026) and steel, cement, and aluminum smelting (2026) — the first unified quota document covering all four industries under the expanded national carbon market, with the framework described as 'marginal tightening' and 2024-2026 the launch phase, deepening from 2027 ^[13].
• **[NEW] Mining diplomacy:** During the 2026 China International Mining Conference, MNR Party Secretary Liu Guohong, Vice Minister Sun Shuxian, and Vice Minister Xu Dachun held bilateral meetings with multiple countries' mining ministers on geological survey, green-smart mining, and investment cooperation ^[14]. NDRC Vice Minister Zhou Haibing met Peru's mining minister Arni Ninyo, with both sides citing strong complementarity in energy and mining and a shared commitment to 'maintain global industrial and supply chain stability' ^[15].
• **Source quality control:** Item ^[1] is the dominant macro-narrative source and alone carries the SHFE selloff mechanism, the tariff-stall report, and the C-L premium collapse; the lithium carbonate decline ^[6] and the Shengxin commentary ^[7] are separate, thinner bulletins and should be read as a band, not a point.