LME Copper Pulls Back After Hitting $10,000 Mark [Institutional Commentary]

(1) US existing home sales in February annualized to 4.26 million units, above the expected 3.95 million and the January figure of 4.08 million. Existing home sales rose 4.2% MoM, beating the forecast of a 3.2% decline and the January decrease of 4.9% MoM. (2) According to Xinhua News Agency, the US President publicly urged the US Fed to cut interest rates, acknowledging that tariffs would impact the US economy and calling for the Fed to "do the right thing." (3) As of Thursday, March 20, SMM copper inventories fell by 2,600 mt to 346,400 mt from Monday, and dropped 9,100 mt from the previous Thursday, marking three consecutive weeks of destocking. Inventories have pulled back 30,600 mt from the peak this year and are 48,600 mt lower YoY. (4) New York copper futures hit a record high. Amid tariff threats, US importers stockpiled copper, pushing the premium of Comex copper futures over LME copper to over $1,200/mt, nearing the record high set in mid-February. (5) On March 20, #1 copper cathode in east China was on parity, down 20 WoW; spot prices in south China were at a premium of 185, up 55 WoW; and spot prices in north China were at a discount of 170, down 40 WoW. (6) LME copper fell 0.88% to $9,910/mt. (7) Under the expectation of tariffs, the price spread between New York and LME copper reached a new high, accelerating the flow of non-US copper cathode into the US. The decline in treatment and refining charges (TC) for copper concentrates widened, with supply remaining tight. There were rumors of unplanned production cuts by smelters, as the peak maintenance period is expected in March-April. Social inventories saw three consecutive weeks of destocking. After copper prices rose, downstream consumption appeared slightly weak, while suppliers stood firm on quotes. (8) Strategy recommendation: After LME copper tested the $10,000 level and pulled back, SHFE copper followed the correction. Short-term defensive positions for longs can be considered based on risk preference, either at the MA5 or MA20. (Source: Zhongzhou Futures)