Trump Considers Further Tariff Hike, Copper Prices Fluctuate at High Levels [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,457/mt, initially edged upward before fluctuating downward, hitting a low of $9,415/mt during the session. It then fluctuated upward, reaching a high of $9,510/mt near the close, before slightly pulling back to settle at $9,476/mt, up 0.07%. Trading volume reached 20,000 lots, and open interest stood at 291,000 lots. Overnight, the most-traded SHFE copper 2503 contract opened at 77,500 yuan/mt, quickly hitting a high of 77,590 yuan/mt before fluctuating rangebound downward, reaching a low of 77,130 yuan/mt during the session. It then rebounded, forming a "V-shape," and slightly pulled back near the close to settle at 77,450 yuan/mt, up 0.06%. Trading volume reached 24,000 lots, and open interest stood at 180,000 lots.

【SMM Copper Morning Brief】News: (1) Trump announced that he had decided to impose "reciprocal tariffs," meaning that the US and its trading partners would levy equal tariff rates on each other. He also stated that additional tariffs would be considered for countries using VAT systems. Trump emphasized that circumventing tariffs by shipping goods through other countries would not be tolerated.

(2) In January, the US PPI rose 3.5% YoY, exceeding both the previous and expected values of 3.3%, marking the highest level since February 2023. On a MoM basis, it increased by 0.4%, higher than the expected 0.3% but lower than the revised previous value of 0.5% (up from 0.2%), complicating the inflation outlook.

Spot Market: (1) Shanghai: On February 13, #1 copper cathode spot prices against the front-month 2502 contract were quoted at a discount of 20 yuan/mt to a premium of 20 yuan/mt, with an average price at parity. WoW, prices remained flat. According to SMM, inventory buildup continued in major domestic regions this week, but the pace has significantly slowed compared to last week. The high contango structure of the SHFE copper 2402 contract dampened short-term purchase willingness among downstream enterprises. Spot premiums are expected to remain near parity today.

(2) Guangdong: On February 13, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 20 yuan/mt to a premium of 30 yuan/mt, with an average premium of 5 yuan/mt, up 35 yuan/mt WoW. Overall, demand increased after the Lantern Festival, driving spot premiums higher and improving spot trades.

(3) Imported Copper: On February 13, warehouse warrant prices ranged from $56/mt to $70/mt (QP February), with the average price down $2/mt MoM. B/L prices ranged from $54/mt to $72/mt (QP March), with the average price flat MoM. EQ copper (CIF B/L) prices ranged from $4/mt to $18/mt (QP March), with the average price flat MoM. Quotes referenced cargoes arriving in late February and early March. Since the large influx of domestic warehouse warrants into the market the day before yesterday, the SHFE/LME price ratio weakened, and transaction prices declined. The price spread between nearshore and offshore B/L widened, with buyers mostly adopting a wait-and-see approach, leading to poor spot trades.

(4) Secondary Copper: On February 13, secondary copper raw material prices rose by 200 yuan/mt MoM. Guangdong bare bright copper prices ranged from 70,300 yuan/mt to 70,500 yuan/mt, up 200 yuan/mt from the previous trading day. The price difference between primary metal and scrap stood at 2,246 yuan/mt, up 327 yuan/mt MoM. The price difference between primary and secondary copper rods was 1,010 yuan/mt. According to an SMM survey, due to end-users' or traders' concerns over high copper prices, they were reluctant to purchase finished cables in large quantities, resulting in sufficient raw material inventories at wire and cable plants. Orders from these plants to upstream secondary copper rod enterprises remained limited. Secondary copper rod enterprises indicated they would wait until next week, expecting orders to rebound if copper prices pull back.

(5) Inventory: On February 13, LME copper cathode inventories decreased by 3,725 mt to 237,925 mt. On the same day, SHFE warrant inventories increased by 7,933 mt to 91,932 mt.

Prices: On the macro side, US PPI data significantly exceeded expectations, but its subcomponents suggested that the PCE data to be released later this month might fall short of expectations. The US dollar weakened. Later, Trump announced that reciprocal tariffs would be imposed on all countries levying tariffs on US imports, with tariffs potentially starting within weeks. This temporarily narrowed the USD/JPY decline before the dollar fell to lower levels, supporting copper prices. On the fundamentals side, copper prices hovered at highs, with downstream demand primarily on an as-needed basis, and overall consumption remained stable. According to SMM, inventory buildup continued in major domestic regions this week, but the pace has significantly slowed compared to last week. As of Thursday, February 13, copper inventories in major regions across China increased by 21,400 mt from Monday to 326,200 mt, up 53,100 mt from last Thursday and 160,400 mt from pre-Chinese New Year levels. The post-holiday inventory buildup exceeded the same period last year by 42,300 mt. In terms of prices, macro factors were supportive, but fundamental support was relatively limited. Copper prices are expected to see limited gains today.

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