Geopolitical Tensions Remained Unabated During the Week, and Copper Prices Fluctuated Within a Narrow Range in the Short Term [SMM Macro Weekly Review]

At the start of this week, US nonfarm payrolls for February unexpectedly declined, and expectations for US Fed interest rate cuts rebounded somewhat, briefly boosting copper prices. Trump then signaled that tensions between the US and Iran might ease, sending oil prices lower and the US dollar weaker, which triggered a phased rebound in copper prices. However, after oil tankers in the Gulf region came under attack and Iran stated that it would continue to close the Strait of Hormuz, tensions in the Middle East escalated again. Rising crude oil prices lifted safe-haven sentiment, and the stronger US dollar index weighed on copper prices. At the same time, US February CPI came in line with expectations, and market bets on interest rate cuts within the year were scaled back markedly, weakening expectations for macro liquidity. In terms of positioning, bulls continued to reduce positions, and capital turned more cautious. Overall, macro uncertainty and repeated shifts in interest rate cut expectations remain intertwined, and copper prices are still likely to fluctuate rangebound in the short term.

Fundamentals side, TC in the copper concentrates market was still falling. Recent mine tender prices pointed to a median of -$60/mt. For copper cathode, the inventory buildup showed a turning point, and the import window opened slightly. According to SMM, downstream operating activity was more active than expected, with active pricing below the copper price range of 100,000 yuan/mt.

Looking ahead to next week, the macro logic is expected to remain unchanged, and geopolitical tensions are still expected to provide strong support to the US dollar, leaving significant short-term resistance for copper prices. However, fundamentals are supporting copper prices, which are expected to remain fluctuating near the range in the short term. LME copper is expected to fluctuate between $12,800/mt and $13,200/mt, and SHFE copper between 99,000 yuan/mt and 101,000 yuan/mt. In the spot market, as delivery approaches, spot market trading logic will fluctuate with the price spread between futures contracts and funding costs, and is expected to gradually rise next week. Spot prices against the SHFE copper 2604 contract are expected to range from a discount of 180 yuan/mt to a discount of 80 yuan/mt.