Multiple Positive Factors Drive Copper Prices to Fluctuate Upward [Institutional Commentary]

The most-traded SHFE copper 2505 contract fluctuated upward, LME copper briefly stood above the $10,000 mark before entering a consolidation phase, COMEX US copper broke through 510¢/lb, and the domestic near-month 4-5 price spread narrowed. On Thursday, the spot copper cathode market saw lukewarm transactions, with downstream players mostly adopting a wait-and-see attitude due to the rapid short-term rise in copper prices. Spot prices turned to parity, and LME inventory fell to 223,000 mt on the previous day.

On the macro front: An EU trade commission official stated that the deadline for imposing retaliatory tariffs on the US would be postponed, providing more time for negotiations between the EU and the US. If no agreement is reached, the EU will consider implementing equivalent tariffs on the US starting April 2. The Bank of England maintained its benchmark interest rate at 4.5%, noting increased uncertainty from global trade policy, ongoing geopolitical risks, and rising indicators of global financial market volatility. The interest rate is expected to remain on a gradual downward path. The US President posted yesterday that the US Fed should continue to cut interest rates, as the impact of US tariffs will gradually permeate the economic environment, and cutting interest rates can be seen as an effective measure to hedge against economic downturn risks and avoid a mild recession.

In terms of industry: According to statistics, China's copper semis production reached 3.163 million mt in January-February, up 4.2% YoY. Bloomberg reported that the US is about to receive a large wave of copper shipments, with an estimated 100,000-150,000 mt of refined copper arriving in the coming weeks. Commodity traders such as Trafigura, Glencore, and Gunvor are redirecting a significant amount of metal originally destined for Asia to the US.

Expectations of US copper tariffs continued to ferment, with total LME cancelled warrants increasing. Some Chinese copper smelters slightly reduced their operating loads. The US President urged the US Fed to continue cutting interest rates to offset the negative impact of tariffs on the economy. Multiple factors drove copper prices upward. Fundamentals-wise, the expectation of tightening mid-term copper ore supply remains unchanged, with domestic social inventory falling back from highs. Technically, LME copper touched the $10,000 level, and it is expected that copper prices will maintain a fluctuating upward trend in the short term.