Rising Concerns Over International Trade Conflicts Weigh on Copper Prices [SMM Copper Morning Meeting Summary]

Futures Market: Overnight, LME copper opened at $9,355/mt, surged initially to a high of $9,416/mt, then fluctuated downward to a low of $9,335/mt before rebounding. It eventually closed at $9,387/mt, down 0.14%, with a trading volume of 18,000 lots and an open interest of 298,000 lots. Overnight, the most-traded SHFE copper 2504 contract opened at 76,980 yuan/mt, hit a high of 77,090 yuan/mt amid fluctuations, then fluctuated downward to a low of 76,660 yuan/mt before consolidating sideways. It finally closed at 76,750 yuan/mt, down 0.52%, with a trading volume of 29,000 lots and an open interest of 163,000 lots.

【SMM Copper Morning Brief】News: (1) Announcement on imposing additional tariffs on certain imported goods originating from the US. The announcement stated that starting from March 10, 2025, a 15% tariff will be imposed on chicken, wheat, corn, and cotton, while a 10% tariff will be imposed on sorghum, soybeans, pork, beef, seafood, fruits, vegetables, and dairy products.

(2) US-Canada tariff war begins! US President Trump confirmed that the US would impose a 25% tariff on Canada starting Tuesday. In response, the Canadian government quickly retaliated with equivalent tariffs on the US. Trump stated that he would immediately impose reciprocal tariffs equal to Canada's retaliatory tariffs. However, US Commerce Secretary brought hope for a potential tariff reduction. On Tuesday, March 4, after the US stock market closed, Commerce Secretary Lutenick stated that Trump might reach a compromise on tariffs with Mexico and Canada, potentially announcing it tomorrow. Trump may lower the new tariff rates imposed on Canada and Mexico.

Spot Market: (1) Shanghai: On March 4, #1 copper cathode spot prices against the front-month 2503 contract were quoted at a discount of 90-50 yuan/mt, with an average price at a discount of 70 yuan/mt, up 10 yuan/mt from the previous trading day. Spot premiums continued to rise yesterday as import arrivals gradually decreased, pushing up high-quality copper prices. Non-registered cargoes were favored by downstream buyers, but transactions remained limited. Spot premiums are expected to rise slightly today.

(2) Guangdong: On March 4, Guangdong #1 copper cathode spot prices against the front-month contract were quoted at a discount of 60 yuan/mt to a premium of 20 yuan/mt, with an average price at a discount of 20 yuan/mt, flat from the previous trading day. Overall, a large outflow of warehouse warrants limited the rise in spot premiums, which remained at the previous day's level.

(3) Imported Copper: On March 4, warehouse warrant prices were $32-42/mt, QP March, with an average price up $2/mt MoM; B/L prices were $55-77/mt, QP April, with an average price up $4/mt MoM. EQ copper (CIF B/L) was quoted at -$4/mt to $4/mt, QP March, with the average price flat MoM. Quotes referenced mid-to-late March arrivals. The SHFE/LME price ratio continued to improve yesterday, and warehouse warrant offers rebounded from earlier levels. Almost all high-quality copper arriving in March was sold out, with transaction prices remaining high. In contrast, EQ cargoes arriving in March saw little interest, with almost no inquiries for offers.

(4) Secondary Copper: On March 4, secondary copper raw material prices fell by 100 yuan, and Guangdong bare bright copper prices were 70,600-70,800 yuan/mt, down 100 yuan/mt from the previous trading day. The price difference between primary metal and scrap was 1,697 yuan/mt, up 56 yuan/mt MoM. The price difference between primary and secondary copper rods was 1,030 yuan/mt. According to the SMM survey, copper prices fluctuated downward during the day. Due to tight supply of secondary copper raw materials, secondary copper rod enterprises had to raise procurement prices to meet daily purchase targets. Today's bare bright copper transaction prices were 70,900-71,000 yuan/mt.

(5) Inventory: On March 4, LME copper cathode inventory decreased by 50 mt to 261,000 mt. On the same day, SHFE warrant inventory increased by 4,858 mt to 161,789 mt.

Prices: Macro side, Trump stated that Canada's retaliatory tariffs on the US would immediately trigger equivalent reciprocal tariffs from the US. The EU strongly condemned the US tariffs on Canada and Mexico. Meanwhile, the US Commerce Secretary suggested that Trump might compromise on tariffs with Canada and Mexico, potentially announcing reductions today. Canada and Mexico have already announced countermeasures, and China has also imposed tariffs on US agricultural products. Concerns over tariffs and global trade resurfaced. However, the US dollar index continued to decline, and copper prices moved lower within a range. Fundamentals side, import arrivals continued to decrease, and non-registered cargoes were favored. Copper prices remained high, but downstream consumption recovery was still limited. Overall, with uncertainties in tariffs and trade outlook and the US dollar index falling below the 106 mark, copper prices are expected to fluctuate at highs today, with no significant decline anticipated.

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【The above information is based on market data collected and comprehensive evaluations by the SMM research team. The information provided 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.】