U.S. Tariff Implementation Causes Disturbance, Combined with PMI Recovery Boost; LME and SHFE Copper Closed Overnight with a V-Shaped Rebound [SMM Copper Morning Comment]

SMM March 4 News: Overnight, LME copper opened at $9,365.5/mt, initially bottoming out at $9,358.5/mt during fluctuations. It then climbed steadily, peaking intraday at $9,429/mt, before declining and rebounding again to form a V-shape. By the end of the session, the center slightly shifted downward, closing at $9,400/mt, up by 0.42%. Trading volume reached 17,000 lots, and open interest stood at 296,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 77,190 yuan/mt. The center initially rose, peaking at 77,430 yuan/mt during fluctuations, then fluctuated downward, bottoming out at 77,070 yuan/mt by the end of the session, before rebounding to close at 77,310 yuan/mt, up by 0.38%. Trading volume reached 24,000 lots, and open interest stood at 159,000 lots. Macro side, Trump announced reciprocal tariffs to take effect on April 2, with a 25% tariff on Canada and Mexico effective March 4. Negotiations on tariffs with these two countries have reached an impasse. Amid market concerns, the US dollar index declined throughout the day, providing support for copper prices. Additionally, with the resumption of work and production after the Chinese New Year, the February Caixin China Manufacturing PMI recorded 50.8, the highest in three months. Positive domestic manufacturing data also boosted market confidence, pushing copper prices higher. Fundamentally, over the weekend, copper cathode social inventories saw only a slight increase, suggesting the current inventory buildup cycle may have ended. Downstream consumption showed signs of recovery, though there is still room for improvement. As of Monday, March 3, SMM's copper inventories in major regions nationwide increased slightly by 900 mt compared to last Thursday, reaching 377,000 mt. Total inventories rose by 211,200 mt compared to the pre-holiday level of 165,800 mt. In summary, the US dollar index fell below the 107 mark, closing down by 0.94%. Copper prices are expected to remain supported today.