Uncertainty Intensifies, SHFE Copper Continues to Pull Back [SHFE Market Closing Commentary on March 28]

SHFE copper opened lower and trended downward in the night session, continuing to fluctuate downward during the day, closing down 1.37%. Recent market uncertainties have increased, with US copper repeatedly pulling back, and SHFE copper also struggling to avoid a correction. Downstream acceptance of high prices remains to be observed, and SHFE copper has been continuously pulling back.

Recently, there has been much speculation about the US imposing additional tariffs on copper. However, as the policy approaches implementation, market concerns about uncertainty have increased, leading to greater divergence. US copper has pulled back, and SHFE copper has also seen a correction. Everbright Futures stated that the market has begun to anticipate the US imposing additional tariffs on copper. Before the policy is implemented, US copper has consistently outperformed other markets, and with the widening price spread between US copper and LME copper, global copper prices have also risen, becoming the "engine" of the market. However, recent performance shows that before the implementation of reciprocal tariffs on April 2, uncertainty has led some bulls to exit, and the market is also preemptively reducing pressure. Therefore, during this period, copper prices may fluctuate and volatility may increase, with performance before and after potentially determining the pace of future trends.

Currently, the impact of tight ore supply has spread to the smelting side, which will continue to support copper prices. However, with the previous continuous rise in copper prices, downstream procurement demand has been average, and the destocking speed of domestic refined copper social inventory has slowed. Subsequent attention is still needed on downstream companies' acceptance of high prices. SDIC Futures stated that copper prices affect the destocking speed, with SMM social inventory increasing by 900 mt to 334,500 mt within the week. SHFE copper is undergoing a short-term adjustment, but the correction is expected to be limited during the peak season, such as between 80,500-81,500 mt, with midstream and downstream companies pricing on demand.