Unexpected Tariff Policies and Weak U.S. Consumption Guide Copper Futures Downward [SMM Macro Weekly Review]

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        On the macro side, this week witnessed multiple global macroeconomic shocks: the US Trump administration officially launched a national security investigation into the copper industry, intending to impose additional tariffs to fill the domestic copper cathode supply-demand gap, which briefly spiked CMX copper prices by 3%, with the price spread against LME copper expected to remain high in the long term. Meanwhile, Trump announced a unified 25% tariff on the EU, Mexico, and Canada starting March 4, strengthening the North American supply chain loop. The Russia-Ukraine conflict entered a critical phase as Ukraine leaned toward signing a mining agreement after the US forgave $500 billion in debt, though Zelensky continued to use NATO membership as leverage, while Putin proposed a rare earth production increase plan and sought to resume aluminum exports to the US. Beyond geopolitical turmoil, the supply chain faced another black swan event: a nationwide power outage in Chile paralyzed the northern copper mining region for six hours, causing temporary production halts at the world's largest copper mine, Escondida, and four major Codelco mines. Although the actual production loss was limited, the incident exposed the fragility of infrastructure in resource-rich countries, further heightening market concerns over copper price volatility risks. Under the influence of multiple factors, LME copper retreated during the week from around $9,500/mt to approximately $9,350/mt. SHFE copper pulled back from 77,500 yuan/mt to 76,700 yuan/mt.

        On the fundamentals side, after the LME structure shifted to BACK, the US dollar-denominated copper market saw undercurrents intensify, with weekly copper concentrate TC transactions dropping below -$10/mt. Following major miners' downward revisions of their 2025 production targets, the spot market experienced escalating tensions. For copper cathode, the price spread between warehouse warrants and B/L continued to widen, and the imported copper market showed significant divergence. Domestically, the pace of social inventory buildup slowed, the SHFE copper forward-month structure shifted to BACK, and suppliers held a tight supply outlook for the future. Coupled with domestic smelters gradually finalizing export plans, a turning point in domestic inventory may soon emerge.

        Looking ahead to next week, several key US economic data points are set to be released, with unemployment rates and February non-farm payroll additions expected to guide subsequent US consumption expectations. After three consecutive months of declining consumer confidence indices, the market holds concerns over a cooling US economy. If employment data underperforms, copper futures may face downward pressure. LME copper is expected to fluctuate between $9,300-9,500/mt, while SHFE copper is projected to range from 75,500-77,000 yuan/mt. On the spot side, the domestic inventory turning point is anticipated, with March port arrivals of imported copper expected to continue declining. Meanwhile, domestic smelters may gradually commence maintenance. Spot prices against the SHFE copper 2403 contract are expected to range from a discount of 100 yuan/mt to a discount of 20 yuan/mt.

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