COMEX Copper Premium Soars as LME Copper Breaks Through 10,000 US Dollar Mark Downstream Buying Interest Cools [SMM Analysis]

SMM March 20 Update: After the US Fed's interest rate decision on Wednesday, as expected, kept rates unchanged, US President Trump posted on social media on March 19 local time, stating that with US tariffs beginning to impact the economy, it would be much better if the Fed cut interest rates. In his latest social media post, Trump also added that he will announce plans to raise trade tariffs on April 2. Concerns over US tariffs on copper resurfaced, and sentiment grew that the US "siphoning" of global copper could lead to supply tightness in other regions. COMEX copper, after rising 2.1% on the 19th, continued its upward trend on the 20th. The price spread between COMEX and LME copper had surged to over $1,300 by March 20, creating an arbitrage incentive for traders to ship copper to the US before the tariffs take effect. The rise in COMEX copper also pushed LME copper above the $10,000/mt mark during trading on March 20. As of 1:09 PM on March 20, LME copper was up 0.15%, at $10,002.5/mt, with a year-to-date gain of 14.05%. As of 1:11 PM on March 20, COMEX copper was up 0.65%, at $5.133/lb, with a year-to-date gain of 27.48%; SHFE copper was up 1.15%, at 81,580 yuan/mt, with a year-to-date gain of 10.54%. 》Click to view SMM futures data dashboard After frequent increases in spot prices of refined copper, downstream buyers have become cautious and are holding back. 》Click to view SMM spot copper prices 》Subscribe to view historical spot price trends of SMM metals Spot Price: On March 20, the average price of SMM #1 copper cathode was 81,440 yuan/mt, up 865 yuan/mt from the previous trading day, a 1.07% increase. According to the historical price trend of SMM #1 copper cathode, the average price has risen for seven consecutive trading days. Market Transactions: In the Shanghai market, at the start of the session on the 20th, some delivery warrants were released, and some suppliers rushed to sell, causing premiums to fall compared to the previous day. However, downstream purchasing sentiment was poor, and actual transactions pulled back. By 11 AM on the 20th, offers in the Shanghai market stabilized, and overall trading slowed. Guangdong inventories have declined for 13 consecutive days, dropping by 32,500 mt from the highest level this year. This stimulated suppliers to stand firm on quotes, significantly boosting premiums. However, the large premium increase, coupled with the sharp rise in copper prices, was not accepted by downstream buyers, leading to poor overall trading in the South China market. Downstream buyers, wary of high prices, almost lost their buying interest, and there were very few inquiries. In the North China market, only sporadic transactions occurred. Outlook: Earlier this month, US President Trump, in his address to a joint session of Congress, stated that reciprocal tariffs will begin on April 2. Tariffs on agricultural products will also take effect on April 2. Recently, Treasury Secretary Bescent revealed that the US "tariff numbers" for trade restrictions against various countries will officially come into effect on April 2. On February 25, 2025, US President Trump signed an executive order directing the US Commerce Secretary to investigate the copper industry, to study whether foreign copper production and imports pose risks to the US economy and national security. The investigation will be conducted under Section 232 of the 1962 Trade Expansion Act, which allows the US President to impose tariffs on foreign products for national security reasons. The Commerce Secretary has 270 days to submit the investigation results to the President. Before the US authorities complete the investigation and provide recommendations, the future US tariffs on copper remain uncertain, and this uncertainty may repeatedly disturb copper prices. Several investment banks expect the US to impose tariffs on copper by the end of the year, and many copper traders anticipate that the price spread between COMEX and LME copper may continue to soar, attracting bullish funds to push up COMEX copper prices, and potentially driving up copper prices in both the SHFE and LME markets. Additionally, global copper may flow to the US due to arbitrage activities and US companies' stocking demand, leading to supply tightness in other regions, further pushing up copper prices. For the future trend of copper prices, attention should be paid to changes in the price spread between the NYMEX and LME. If the spread continues to widen, it may continue to drive up copper prices; conversely, if the spread narrows, the impact of arbitrage on copper prices will weaken. Attention should also be given to changes in fundamentals. Currently, concerns over tight copper ore supply have not been alleviated. It remains to be seen whether the easing of export policies for copper concentrates in Indonesia and Panama can alleviate these concerns. With copper prices continuously climbing, the "fear of high prices" has suppressed resilient downstream consumption. In a situation of weak supply and demand, attention should be paid to whether increased exports and reduced imports can continue to reduce domestic copper inventories. If destocking is sustained, it may provide support for copper prices. Furthermore, for the future direction of copper prices, one must be wary of the impact of repeated geopolitical conflicts on market risk appetite, and the potential for renewed concerns about a "stagflation" in the US economy following the implementation of US tariff policies. If "Trump recession trades" heat up, they may suppress the market performance of copper prices. Institutional Views: Goldman Sachs and Citigroup both expect the US to impose a 25% import tariff on copper by the end of the year. JPMorgan expects the US to impose at least a 10% tariff on refined copper and copper products by the end of Q3 2025, with a significant risk of the tariff being raised to 25%. Minmetals Futures noted: At the price level, there is still uncertainty regarding the US imposing tariffs on copper, and the expectation of tariffs has strengthened, posing a risk of price volatility. The raw material market is also a key variable affecting recent copper price movements. Although TCs for copper concentrates have not yet bottomed out, and concerns over copper ore supply persist, Freeport Indonesia's renewed export license and expectations of copper inventory exports from Panama suggest that TCs may gradually stabilize. Additionally, the impact of maintenance at domestic smelters is relatively small, and short-term inventory reduction is ongoing, though its sustainability needs to be observed. The upward trend in copper prices may face challenges. Jinyuan Futures stated: The Fed's decision to hold rates steady in March and its lack of excessive concern over inflation caused by tariffs, along with the dot plot indicating two more rate cuts this year, have led the market to actively trade the premium expectations for US copper tariffs. Coupled with the realization of production cut plans by some Chinese copper smelters, this has boosted bullish sentiment. Fundamentally, the growth rate of mine supply continues to decline, and negative TCs are expanding. Domestic social inventories are turning downward, and LME copper is approaching the $10,000/mt mark. Copper prices are expected to maintain a strong upward trend in the short term, but caution is needed against the risk of a price correction due to expectations of a mild US economic recession. Recommended Reading: 》Copper Rush Before Trump's Tariffs? A Surge of Copper Expected to Flood US Ports... For more information on copper prices, fundamentals, and policy, you are welcome to attend the CCI2025SMM (20th) Copper Industry Conference and Copper Industry Expo, hosted by SMM, to be held in Nanchang, Jiangxi, from April 22-25, 2025. Over 3,000 industry elites, representatives from upstream and downstream enterprises in the copper industry chain, government officials, industry associations, third-party equipment, logistics, and warehousing, as well as experts from universities and research institutions, will gather together. The conference will cover mining, smelting, copper processing, trade, recycling, and end-use applications, encompassing the entire copper industry chain. At the conference, over 100 exhibitors will showcase the latest copper processing and smelting equipment, high-quality raw material suppliers, and new copper-based materials, highlighting the innovation and vitality of the copper industry. The conference will feature a variety of activities: The main forum will focus on global copper market trends, raw material supply, and policy impacts, interpreting market directions. Sub-forums will delve into specific areas such as electrical power transmission and distribution, recycled copper, copper-based new materials, hardware and plumbing, and ESS, discussing industry hot topics. During the conference, there will also be a two-day field trip to 12 representative copper industry companies with a total capacity of 1 million mt. Sharing cutting-edge technology and valuable experience, the event aims to promote the upgrade of the copper industry chain and drive high-quality development. CCI2025SMM (20th) Copper Industry Conference and Copper Industry Expo will help you grasp industry trends, expand your network, and find business opportunities! SMM sincerely invites you to gather in Nanchang, Jiangxi, from April 22-25, to usher in a new era of copper and plan for new developments.