Copper Prices Fluctuate at High Levels, Slowing Destocking of Copper Semis [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,509/mt, initially reaching a high of $9,530/mt before fluctuating downward to a low. After a slight rebound, it continued to pull back, touching a low of $9,411.5/mt and finally closing at $9,423/mt, up 0.3%. Trading volume reached 22,000 lots, and open interest stood at 296,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 77,310 yuan/mt, initially hitting a high of 77,350 yuan/mt before fluctuating downward to an intraday low of 76,900 yuan/mt. It rebounded slightly towards the end and finally closed at 77,100 yuan/mt, down 0.1%. Trading volume reached 29,000 lots, and open interest stood at 165,000 lots.

【SMM Copper Morning Brief】News: (1) The Political Bureau of the CPC Central Committee held a meeting to discuss the draft of the "Government Work Report" to be submitted for review at the third session of the 14th National People's Congress. The meeting emphasized implementing more proactive macro policies, expanding domestic demand, promoting the integration of technological and industrial innovation, stabilizing the real estate and stock markets, and preventing and mitigating risks in key areas and external shocks.

(2) On February 28 local time, US President Trump and Ukrainian President Zelensky held talks at the White House. During the meeting, a heated argument broke out in front of the media, leading Zelensky to leave the White House early. The planned joint press conference was canceled, and the US-Ukraine mineral agreement was not signed.

Spot Market: (1) Shanghai: On February 28, #1 copper cathode spot prices against the front-month 2503 contract were quoted at a discount of 120-80 yuan/mt, with an average discount of 100 yuan/mt, up 5 yuan/mt MoM. Last Friday, suppliers continued to raise their offers. Although some companies had end-of-month settlement needs, overall market transactions remained robust. Influenced by destocking in surrounding regions and increased exports, suppliers were reluctant to sell their inventories. Spot premiums are expected to rise further on Monday.

(2) Guangdong: On February 28, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 70-10 yuan/mt, with an average discount of 30 yuan/mt, flat compared to the previous trading day. Overall, end-of-month market activity was moderate, and spot premiums and discounts remained unchanged from the previous day.

(3) Imported Copper: On February 28, warehouse warrant prices were $30-40/mt, QP March, with an average price down $4/mt MoM. B/L prices were $51-63/mt, QP March, with an average price up $3/mt MoM. EQ copper (CIF B/L) was quoted at -$4/mt to $4/mt, QP March, with the average price unchanged MoM. Offers referenced cargoes arriving in mid-to-early March. Transactions for high-quality copper arriving in March remained firm, with scarce offers for South American copper due to expectations of future tariffs. Overall, market activity was subdued, with both buyers and sellers showing caution.

(4) Secondary Copper: On February 28, secondary copper raw material prices remained unchanged MoM. Guangdong bare bright copper prices were 70,500-70,700 yuan/mt, flat compared to the previous trading day. The price difference between primary metal and scrap was 1,564 yuan/mt, down 105 yuan/mt MoM. The price difference between primary and scrap rods was 790 yuan/mt. According to the SMM survey, concerns resurfaced among importers about whether US copper scrap would be included in China's countermeasures against the US, following Trump's announcement of an additional 10% tariff on all Chinese imports. Expectations for a recovery in imported secondary copper raw materials were once again disrupted.
(5) Inventory: On February 28, LME copper inventories decreased by 15,755 mt to 262,075 mt. SHFE warrant inventories increased by 2,881 mt to 157,557 mt.

Prices: Macro-wise, Trump stated on Wednesday that his administration would soon announce a 25% tariff on goods imported from the EU. He also raised hopes of delaying new high tariffs on imports from Mexico and Canada, stating that tariffs on these countries would take effect on April 2, about a month later than the current deadline. Overall, rising expectations of US tariffs on copper strengthened LME copper but had limited impact on SHFE copper. Fundamentally, high copper prices in the short term remain an obstacle to destocking of processed materials. Suppliers reported difficulties in selling, with both buyers and sellers showing low activity. Price-wise, copper prices are expected to be supported by tariff expectations today.

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