Will Copper Prices Continue to Rise Next Week After the Turning Point in Copper Inventories? [SMM Commentary]

Recently, a series of "disappointing" data released by the US and the repeated changes in US tariff policies have reignited market concerns over a slowdown in US economic growth. The US dollar index has continued to weaken, currently falling to around 103.6. Expectations for the US imposing tariffs on copper once drove COMEX copper prices sharply higher, which in turn boosted LME copper and SHFE copper prices. Domestically, a warm macro outlook combined with destocking in domestic copper inventories supported copper prices, which rose overall this week. As of 17:19 on March 7, LME copper fell 0.59% to $9,676.5/mt, with a weekly gain of 3.4%. SHFE copper rose 0.27% to 78,320 yuan/mt, with a weekly increase of 1.7%.

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Fundamentals

This Week, the Price Center of Spot TC for Copper Concentrates Continued to Decline Slightly

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This week, the price center of spot TC for copper concentrates continued to decline slightly. On March 7, the SMM Imported Copper Concentrate Index (weekly) was reported at -$15.83/mt, down $1.43/mt from the previous period's -$14.4/mt. The pricing coefficient for domestic ore with a grade of 20% was 93%-95%. After the LME futures market structure shifted from Contango to a backwardation structure, traders adjusted the QP for copper concentrates from M+5/M+6 to M+4 to mitigate business risks. Notably, there has been new progress in Indonesia's copper concentrate exports. On March 4, Indonesia's Ministry of Energy and Mineral Resources issued Ministerial Regulation No. 6 of 2025, amending provisions in Regulation No. 6 of 2024 regarding the completion of domestic metal mineral refining facilities. The new regulation aims to address temporary export needs under force majeure circumstances when refining facilities cannot operate for holders of special mining permits.》Click to View Details

Domestic Weekly Copper Inventory Sees First Destocking Post-Chinese New Year, Overseas Copper Inventories Also Continue to Decline

Domestic Inventory:As of Thursday, March 6, copper inventories in major regions across China monitored by SMM decreased by 9,000 mt from Monday to 368,000 mt, down 8,100 mt from last Thursday. This marks the first weekly destocking since the Chinese New Year, and SMM believes the inventory turning point has arrived. Specifically, inventories in Shanghai decreased by 7,700 mt from Monday to 235,900 mt, as both imported and domestic copper arrivals were limited this week. Inventories in Jiangsu increased slightly by 2,600 mt to 58,400 mt, as higher copper prices weakened downstream consumption and arrivals slightly increased, leading to a rise in inventory. Guangdong inventories fell by 3,400 mt to 66,000 mt, mainly due to reduced arrivals, while consumption showed no improvement and even declined.

Overseas Inventory:This week, both LME copper inventories and COMEX copper inventories experienced destocking. LME copper inventories stood at 257,325 mt on March 7, down 4,750 mt from 262,075 mt on February 28. COMEX copper inventories were 92,458 short tons on March 6, down 3,681 short tons from 96,139 short tons on February 27.

High Copper Prices Suppress Seasonal Order Release, Weekly Operating Rate of Copper Cathode Rods Declines WoW

Copper Cathode Rods:The weekly operating rate of major domestic copper cathode rod enterprises (February 28-March 6) declined WoW. March is traditionally a peak season, but in the first week of March, as the US dollar index continued to weaken, copper prices surged again. Under the pressure of high absolute prices, new orders remained suppressed, while the price difference between primary metal and scrap widened to over 1,000 yuan/mt. Overall consumption was under pressure, limited to just-in-time restocking and some downstream enterprises rushing to buy amid continuous price rise. The operating rate of copper cathode rod enterprises this week fell short of expectations. Looking ahead, although current consumption continues to be weighed down by high copper prices and new order releases fall short of expectations, most enterprises remain optimistic about gradual improvement in end-use consumption during the traditional peak season.》Click to View Details

Outlook

Macro Side:Domestic Side: Focus on the voices from the Two Sessions and China's CPI, PPI, and social financing data. Recently, multiple US data releases have fallen short of expectations, coupled with disruptions from repeated changes in US tariff policies, raising concerns about a slowdown in US economic growth. Pay attention to upcoming US CPI and initial jobless claims data, which will provide guidance on the US Fed's interest rate path. If US CPI data continues to decline, expectations for US Fed interest rate cuts may rise, putting pressure on the US dollar and providing more support for copper prices at the bottom.

Fundamentals Side:Looking ahead, as the export window has opened, arrivals of both domestic and imported copper are expected to decrease. On the downstream consumption side, with the arrival of the peak season, operating rates of downstream enterprises are expected to continue rising, and next week's consumption is expected to improve compared to this week. Therefore, SMM believes that next week will see a scenario of reduced supply and increased demand, with weekly inventories continuing to decline.

In Summary:Macro Side: Focus on whether there will be more favourable macro news domestically, which could bring a warm macro breeze to copper prices. The repeated and uncertain US tariff policies will frequently disrupt copper prices. Pay attention to the implementation of US tariffs and the progress of the US Section 232 investigation on imported copper. Be cautious of a potential technical rebound in the US dollar index after its continuous decline, which could pressure copper prices. Fundamentals side, tight copper ore supply has yet to show significant improvement. Monitor the progress of Indonesia's copper concentrate exports. Considering the traditional peak consumption season, domestic copper inventories are expected to continue destocking, providing strong fundamental support for copper prices.

Institutional Views:

China Fortune Futures: On Friday, SHFE copper gave up gains above 79,000 yuan, with domestic spot copper following the rise moderately, quoted at 78,790 yuan. Customs trade data aligns with the record US trade deficit, and tariff uncertainties accelerate logistics flows. Awaiting US non-farm payrolls data in the evening, pay attention to the US dollar index and gold prices. This week, SHFE copper remained volatile between 76,500-79,000 yuan, with a wait-and-see approach.

China Fortune Futures: Today, both copper and aluminum hit new highs in this round of rebound. During the daytime trading session, resistance emerged, and adjustments in overseas stock markets in the afternoon also negatively impacted base metals, including copper and aluminum. However, copper and aluminum performed strongly overall this week, with SHFE copper recording a weekly gain of nearly 2% and SHFE aluminum nearly 1%. The increase was accompanied by higher trading volumes and open interest. Although there are short-term signs of adjustment, the medium-term rebound trend remains unchanged. Beyond recent macro factors, copper needs to focus on changes on the supply side, as copper concentrate TCs continue to decline, and copper smelters are generally operating at a loss, raising the possibility of production cuts and maintenance in the future.

ANZ: On Thursday, ANZ predicted, "If the US imposes a 25% tariff on all copper imports, copper prices are expected to rise. We anticipate accelerated shifts in trade flows in the coming weeks."

J.P. Morgan: J.P. Morgan's report predicts that the global copper cathode supply deficit will expand to 160,000 mt in 2026 and maintains its forecast for next year's copper prices, with an average price of approximately $11,000/mt in 2026.

Recommended Reading:

》Trump's Policy Swings Drive US Dollar Index Down Sharply, Macro and Fundamentals Jointly Guide Copper Prices Higher [SMM Macro Weekly Review]

》New Progress in Indonesia's Copper Concentrate Exports, Mine Traders' Tender Prices Drop Significantly [SMM Copper Concentrate Spot Weekly Review]

》Weekly Decline of 9,000 mt in Copper Inventories Across Major Regions Nationwide [SMM Weekly Data]

》Narrowing Price Difference Between Primary Metal and Scrap Fails to Offset Weak Orders, February Copper Cathode Rod Operating Rate Declines MoM [SMM Analysis]

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