Viewpoint: The expectations for production cuts triggered by the previous raw material supply tightness are gradually being digested. With the improvement in overseas copper concentrate supply and the approaching results of reciprocal tariff investigations, market risk appetite has pulled back, increasing the pressure for a copper price pullback. It is not advisable to be overly optimistic about the upside potential of copper prices at present. Rationale: Macro sentiment is cooling on the margin. Domestic supportive policies have been implemented, while the US Fed has lowered its economic growth forecast for this year and raised its unemployment rate forecast, indicating a weaker economic outlook. Additionally, as the global reciprocal tariff results approach, market risk appetite is retreating, putting pressure on copper prices.
Fundamentals are weakening, with global copper inventories rebounding. Panama has approved the export of 120,000 mt of copper concentrate inventory from the Cobre mine, and Freeport has obtained an export license for 1.27 million mt of copper concentrate from Indonesia's trade ministry, easing concerns over tight raw material supply. Meanwhile, the negative feedback from high copper prices on downstream demand has spread to the processing sector. Currently, the operating rates of refined copper rod, secondary copper rod, and brass billet industries have declined MoM, and spot premiums have turned into discounts. Last week, global copper inventories increased to 675,300 mt, with domestic copper inventories rising by 11,700 mt to 366,000 mt, LME copper continuing to destock by 9,200 mt to 224,600 mt, and COMEX copper inventories remaining almost unchanged at 84,700 mt. Overall, the expectations for production cuts triggered by the previous raw material supply tightness are gradually being digested. With the improvement in overseas copper concentrate supply and the approaching results of reciprocal tariff investigations, market risk appetite has pulled back, increasing the pressure for a copper price pullback. It is not advisable to be overly optimistic about the upside potential of copper prices at present. Trading Strategy: For the most-traded SHFE copper contract, refer to 79,000-82,000 yuan/mt. Strategically, it is advisable to gradually reduce positions on rallies, and those who have not entered the market should remain on the sidelines. Risk Warning: Tariff policies may exceed or fall short of expectations, and geopolitical conflicts.
