Positive Signals Released Domestically, Copper Prices Edged Up Overnight [SMM Copper Morning Meeting Summary]

Futures Market: LME copper opened at $9,384.5/mt overnight, with its center of gravity declining during early trading and bottoming at $9,361/mt. It then climbed steadily, peaking at $9,485/mt before closing at $9,475/mt, up 0.99%. Trading volume reached 15,000 lots, and open interest stood at 295,000 lots. The most-traded SHFE copper 2504 contract opened at 76,830 yuan/mt overnight, bottomed at 76,820 yuan/mt in early trading, and then rose steadily after slight fluctuations, peaking at 77,550 yuan/mt before closing at 77,430 yuan/mt, up 0.61%. Trading volume reached 16,000 lots, and open interest stood at 159,000 lots.

【SMM Copper Morning Brief】News: (1) Trump stated that auto tariffs would be around 25%, and large enterprises related to chips and automobiles would return to the US.

(2) PBOC Governor Pan Gongsheng announced that the Chinese government would implement more proactive fiscal policies and moderately loose monetary policies.

Spot Market: (1) Shanghai: On February 18, #1 copper cathode spot prices against the front-month 2503 contract were quoted at a discount of 130-80 yuan/mt, with an average discount of 105 yuan/mt, down 225 yuan/mt from the previous trading day. Market transactions improved significantly compared to the previous trading day. Spot premiums remained firm after the delivery of the SHFE copper 2502 contract compared to the same period in the lunar calendar. However, due to delayed downstream operations, current inventory destocking was relatively slow. Spot premiums are expected to stabilize today.

(2) Guangdong: On February 18, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 130-70 yuan/mt, with an average discount of 100 yuan/mt, down 175 yuan/mt from the previous trading day. Overall, copper prices pulled back, and premiums declined, with spot trades improving compared to the previous trading day.

(3) Imported Copper: On February 18, warehouse warrant prices ranged from $52 to $66/mt, QP March, with the average price unchanged from the previous trading day. B/L prices ranged from $50 to $68/mt, QP March, with the average price also unchanged. EQ copper (CIF B/L) was quoted at $1-15/mt, QP March, with the average price unchanged. Quotes referenced cargoes arriving in late February and early March. The SHFE/LME price ratio for the SHFE copper 2503 contract was around -500 yuan/mt yesterday. LME copper 3M-Mar was at C$47.8/mt, and March-April was around C$24/mt. LME copper's nearby structure returned to Contango yesterday, with market activity significantly improving compared to the previous trading day. Sellers maintained firm offers, and limited transactions were centered around the same levels as the previous session.

(4) Secondary Copper: On February 18, secondary copper raw material prices fell by 300 yuan/mt. Guangdong bare bright copper prices were 70,400-70,600 yuan/mt, down 300 yuan/mt from the previous trading day. The price difference between primary metal and scrap was 1,715 yuan/mt, down 176 yuan/mt MoM. The price difference between primary and secondary copper rods was 685 yuan/mt. According to the SMM survey, as copper prices pulled back, secondary copper raw material suppliers reported difficulties in procurement, leading to reduced supply in the market. Suppliers stood firm on quotes, and secondary copper rod plant gross profits dropped from 1,250 yuan/mt to 750 yuan/mt. If copper prices continue to decline, profit margins for secondary copper rod enterprises will be further compressed.

(5) Inventory: On February 18, LME copper cathode inventory increased by 9,800 mt to 263,775 mt. SHFE warrant inventory rose by 1,807 mt to 156,298 mt.

Prices: Macro side, Trump announced that auto tariffs would be around 25%, and large enterprises related to chips and automobiles would return to the US. He may also meet with Putin by the end of this month. The uncertainty surrounding Trump's tariff plans and Russia-Ukraine peace talks reignited risk aversion sentiment. Gold prices approached historical highs again, and copper prices also rebounded. However, gains in copper prices were limited due to the rising center of gravity in the US dollar index. Fundamentals side, copper prices pulled back yesterday, and premiums declined. Market transactions showed some recovery, but end-use consumption remained weak, and destocking of social and enterprise inventories was still slow. Overall, with risk aversion sentiment and market recovery underway, copper prices are expected to find support 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 research advice. Clients should make prudent decisions and not substitute this for independent judgment. Any decisions made by clients are unrelated to SMM.】