Powell's Speech Stabilizes Market Expectations, Copper Prices Pull Back [SMM Copper Morning Meeting Summary]

Futures Market: Last Friday night, LME copper opened at $9,679/mt, initially reaching a high of $9,691.5/mt before fluctuating downward. After a slight rebound during the session, it continued to decline, hitting a low of $9,564/mt near the close. It then slightly rebounded and finally settled at $9,602/mt, down 0.9%. Trading volume reached 20,000 lots, and open interest stood at 303,000 lots. Last Friday night, the most-traded SHFE copper 2504 contract opened at 78,440 yuan/mt, fluctuated initially, and hit a low of 78,330 yuan/mt. It then surged to a high of 78,910 yuan/mt during the session before fluctuating downward near the close, finally settling at 78,430 yuan/mt, down 0.34%. Trading volume reached 36,000 lots, and open interest stood at 169,000 lots.

【SMM Copper Morning Brief】News: (1) Non-farm Payrolls - US non-farm payrolls for February recorded 151,000, slightly below market expectations, while the unemployment rate stood at 4.1%, the highest since November 2024. Following the data release, traders no longer bet on a US Fed interest rate cut in May, now expecting it to resume in June. However, the Fed is still anticipated to cut rates by approximately 75 basis points this year.

(2) US Fed - Powell: The Fed is not in a hurry to cut rates before the impact of Trump’s policies becomes clearer. The tariff effects this time may differ. The Fed will not overreact to one or two economic data points that exceed or fall short of expectations. The zero lower bound may no longer be the baseline scenario, and long-term inflation expectations remain crucial. Trump: Will soon appoint the Fed’s Vice Chair for Supervision.

Spot Market: (1) Shanghai: On March 7, #1 copper cathode spot prices against the front-month 2503 contract were quoted at a discount of 30 yuan/mt to a premium of 20 yuan/mt, with an average price at a discount of 5 yuan/mt, up 10 yuan/mt from the previous trading day. As the week progresses and delivery approaches, suppliers are expected to stand firm on quotes around parity. However, spot premiums and discounts are unlikely to rise significantly due to the pressure from abundant warehouse warrants.

(2) Guangdong: On March 7, #1 copper cathode spot prices against the front-month contract were quoted at a discount of 50 yuan/mt to a premium of 20 yuan/mt, with an average price at a discount of 15 yuan/mt, unchanged from the previous trading day. Overall, despite a decline in inventory, copper prices continued to rise, and downstream buyers refrained from chasing higher prices, leading to weaker spot trades.

(3) Imported Copper: On March 7, warehouse warrant prices ranged from $45 to $55/mt (QP March), with an average price up $11/mt from the previous trading day. B/L prices ranged from $62 to $90/mt (QP April), with an average price up $5/mt. EQ copper (CIF B/L) prices ranged from $8 to $20/mt (QP March), with an average price up $8/mt. Quotes referenced cargoes arriving in mid-to-late March. On March 7, the SHFE/LME price ratio against the SHFE copper 2503 contract was around -1,350 yuan/mt. LME copper 3M-Mar backwardation was $25.77/mt, and 3M-Apr backwardation was $18.4/mt, with March-date to April-date backwardation at approximately $7.37/mt. On March 7, EQ B/L and warehouse warrant offers rose significantly, and the market heard of limited transactions for standard fire-refined copper. Some traders remained cautious about rising premiums and refrained from selling their inventories. Overall, market activity cooled compared to the previous trading day, but concerns over tight future supply persisted.

(4) Inventory: On March 7, LME copper cathode inventory decreased by 1,850 mt to 257,325 mt. On the same day, SHFE warrant inventory decreased by 1,654 mt to 157,487 mt.

Prices: Macro side, last week, Trump’s erratic trade policies heightened concerns over a US economic recession. Coupled with mixed February non-farm payrolls data (151,000, slightly below market expectations, and an unemployment rate of 4.1%, the highest since November 2024), the labour market slowed, and US equities came under pressure. Last Friday, Powell’s remarks aimed to stabilize market expectations, stating that the Fed is not in a hurry to cut rates before the impact of Trump’s policies becomes clearer, leading to a pullback in copper prices. This week, US inflation data will be a key market focus. Fundamentally, copper prices recently fluctuated upward, with downstream enterprises primarily purchasing as needed, and market sentiment remained cautious. Looking ahead to this week, as the delivery date approaches, suppliers are expected to stand firm on quotes, keeping prices firm. However, due to the pressure from abundant warehouse warrants, spot premiums and discounts are unlikely to see significant upward movement. On the price front, overseas tariffs continue to disrupt the market, while the US dollar index remains low. Coupled with strong domestic policy expectations, the overall sentiment is relatively positive. Copper prices are expected to fluctuate at highs today.

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【The above information is based on market collection and comprehensive evaluation 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.】