Tariffs Loom, Risk Aversion Sentiment Rises, Copper Prices Continue to Pull Back [Institutional Commentary]

(1) China's official manufacturing PMI for March was 50.5, up from the previous reading of 50.2, marking the fastest expansion pace in a year.

(2) The White House announced that the US President will decide on the final tariff policy on April 2, and the reciprocal tariff plan will not include any exemption clauses.

(3) As of Monday, March 31, SMM copper inventories increased by 2,700 mt WoW to 337,200 mt. Total inventories were 54,000 mt lower YoY compared to 391,200 mt.

(4) SMM China's copper cathode production in March increased by 63,900 mt MoM, up 6.04%, and rose 12.27% YoY. Cumulative production from January to March increased by 274,500 mt YoY, up 9.4%.

(5) On March 31, #1 copper cathode in east China was quoted at a premium of 15, up 20 WoW; spot cargo in south China was quoted at a premium of 10, down 50 WoW; spot cargo in north China was quoted at a discount of 130, up 30 WoW.

(6) LME copper fell 0.96% to $9,690/mt.

The US President will decide on the final tariff policy on April 2, and the market has entered a risk-averse mode, with the gold-to-copper ratio rising significantly. China's March manufacturing PMI continued to rebound, and the new orders index rose driven by pre-tariff exports. However, the market remains somewhat concerned about the sustainability of the post-tariff economic momentum. From a fundamental perspective, domestic copper cathode production in March remained higher than expected, increasing by over 60,000 mt MoM. The CSPT did not set a Q2 guidance price for spot copper concentrate purchases, but there was no discussion of joint production cuts, which was slightly below expectations. After the center of copper prices shifted downward, downstream buyers made some purchases, but copper inventories still built up over the weekend. Spot market trading was relatively mediocre yesterday, with downstream players mainly adopting a cautious wait-and-see approach.

Strategy recommendation: The market is heavily risk-averse, and SHFE copper's closing price has fallen below the MA20. Early long positions should be exited to prevent macro risks from expanding. Focus on the support level at 79,500, and temporarily adopt a wait-and-see approach, looking for opportunities to re-enter the market after the price stabilizes.

(Source: Zhongzhou Futures)