Strong Support Below, SHFE Copper Center Continues to Shift Upward [March 20 SHFE Market Closing Commentary]

SHFE copper opened higher and continued to fluctuate upward during the day, closing up 1.26%. The most-traded contract touched a high of 81,720 yuan, refreshing the highest level since June last year. Expectations that the US might impose additional tariffs on copper continued to boost US copper, also driving SHFE copper. Additionally, with domestic refined copper inventories continuously declining, the center of SHFE copper prices kept rising. The US Fed held rates as expected, but Powell's speech conveyed a dovish tone, boosting market risk sentiment to some extent. Moreover, the market continued to trade on expectations that the US might impose additional tariffs on copper, leading to strong performance in US copper. Everbright Futures stated that COMEX copper continued to strengthen last night, with the price spread between Comex and LME widening, indicating the market is pricing in the possibility of US import tariffs on copper increasing from 10% to 25%, which also lifted both domestic and international copper prices. As of March 20, SMM national mainstream region copper inventories fell by 2,600 mt to 346,400 mt compared to Monday, marking three consecutive weeks of destocking. Current levels are down 30,600 mt from the annual high and 48,600 mt lower YoY. Regarding supply and demand, Xinhu Futures noted that with the arrival of the "Golden March, Silver April" peak consumption season in China, domestic inventories began to decrease, and spot quotes turned to premiums. It is expected that the premium will steadily rise. In the medium term, a copper ore shortage will put significant pressure on smelters, with production cuts possible in Q2. Under the boost of new energy and power demand, global copper consumption growth is anticipated, and the overall fundamentals are bullish for copper prices. With growing concerns over tight spot supply, it is expected that copper prices will continue to be strong.