Macro Uncertainty Persists; Copper Prices Expected to Maintain Fluctuating Trend [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,529/mt, peaked at $9,538.5/mt in early trading, then fluctuated downward, hitting a low of $9,438/mt near the close, and finally settled at $9,442/mt with open interest at 289,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 77,670 yuan/mt, peaked at 77,710 yuan/mt in early trading, then fluctuated downward, hitting a low of 77,340 yuan/mt near the close, followed by a slight rebound in the center, and finally settled at 77,520 yuan/mt, up 0.51%, with trading volume at 20,000 lots and open interest at 162,000 lots.

【SMM Copper Morning Brief】News: (1) US Fed January meeting minutes: Several participants indicated that it might be appropriate to pause or slow balance sheet reduction until the debt ceiling issue is resolved; Bostic stated that the Fed has made good progress in balance sheet reduction.

(2) Two departments issued the "2025 Action Plan for Stabilizing Foreign Investment": Expanding pilot programs for opening up in sectors such as telecommunications, healthcare, and education; removing restrictions on foreign-invested companies using domestic loans.

Spot Market: (1) Shanghai: On February 19, #1 copper cathode spot prices against the front-month 2503 contract were quoted at a discount of 130-90 yuan/mt, with an average discount of 110 yuan/mt, down 5 yuan/mt from the previous trading day. Trading activity yesterday was slightly weaker than the previous day due to downstream operating rates yet to recover and weak market buying interest. Spot premiums are expected to decline slightly today.

(2) Guangdong: On February 19, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 120-50 yuan/mt, with an average discount of 85 yuan/mt, up 15 yuan/mt from the previous trading day. Overall, improved consumption pushed spot premiums higher, and trading activity was better than the previous day. Spot premiums are expected to fluctuate upward in the near term.

(3) Imported Copper: On February 19, warehouse warrant prices were $48-62/mt, QP March, with an average price down $4/mt from the previous trading day; B/L prices were $50-64/mt, QP March, with an average price down $2/mt from the previous trading day; EQ copper (CIF B/L) was $4-12/mt, QP March, with the average price unchanged from the previous trading day. Quotes referenced late February and early March arrivals. Yesterday, the SHFE/LME price ratio against the SHFE copper 2503 contract was around -650 yuan/mt, LME copper 3M-Mar was at C$45.39/mt, and March-date to April-date was around C$21.5/mt. The SHFE/LME price ratio continued to weaken yesterday due to the narrowing of the near-month Contango structure, increased holding costs for suppliers, and the arrival of bonded warehouse warrants. Transaction centers for warehouse warrants and near-port cargoes declined. However, far-month B/L quotes remained firm.

(4) Secondary Copper: On February 19, secondary copper raw material prices rose by 300 yuan/mt MoM, with Guangdong bare bright copper prices at 70,700-70,900 yuan/mt, up 300 yuan/mt from the previous trading day. The price difference between primary metal and scrap was 1,491 yuan/mt, down 224 yuan/mt MoM. The price difference between primary and secondary copper rods was 730 yuan/mt. According to the SMM survey, due to tightening domestic secondary copper raw material supply, secondary copper raw material prices rose faster than copper prices, further narrowing the price difference between primary metal and scrap. Given the current situation where secondary copper raw material supply is unlikely to improve in the short term, the price difference between primary metal and scrap may narrow further.

(5) Inventory: On February 19, LME copper cathode inventory increased by 7,125 mt to 270,900 mt; SHFE warrant inventory increased by 1,034 mt to 157,332 mt.

Prices: Macro side, the US Fed January meeting minutes indicated that several participants suggested it might be appropriate to pause or slow balance sheet reduction until the debt ceiling issue is resolved. Additionally, Trump warned Zelensky to make a quick decision on peace talks or risk "losing his country." Meanwhile, after Trump announced a 25% tariff on cars and chips, the EU trade commissioner stated readiness to discuss lowering car tariffs with the US. Market uncertainties persisted, lifting copper prices. Fundamentals side, after copper prices rose, market consumption was suppressed again. Trading activity yesterday was relatively subdued, with the market awaiting a copper price correction. Overall, market uncertainties persist, and copper prices are unlikely to see a significant decline.

》Click to view the SMM Metal Database

【The above information is based on market data and comprehensive assessments by the SMM research team. The information provided is for reference only and does not constitute direct investment research advice. Clients should make cautious decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.】