Multiple Factors Support SHFE Copper to Continue Fluctuating Upward [SHFE Market Closing Review on March 25]

SHFE copper opened slightly higher in the morning, with intraday gains further expanding, closing up 1.17%. US copper remained firm, supported by tight ore supply, while domestic copper social inventories continued to decline, pushing the center of copper prices higher. However, attention should be paid to demand performance and the realization of positive factors.

Recently, US copper has remained strong, supported by expectations of potential US tariff hikes on copper. On the raw material side, as of last week, domestic copper concentrate spot TCs continued to decline, with extremely low TCs exacerbating cost pressures on smelters. Market concerns persist that tight ore supply could transmit to the ingot end, continuing to support copper prices. Minmetals Futures noted that market expectations for US tariff hikes are strong, maintaining a high price spread between US copper and LME copper. Due to the uncertainty surrounding the extent of tariff hikes, copper price volatility risks remain. Copper concentrate TCs continue to decline, with no signs of stabilization yet. The ongoing competition between copper ore inventory exports from Indonesia and Panama and smelter maintenance persists. Overall, copper prices still have the potential to rise further, but as prices climb, caution is warranted regarding negative feedback from consumption and the risks associated with the realization of positive factors after US tariff hikes.

Recently, LME copper inventories have continued to deplete, with the latest inventory falling to around 220,000 mt, while the cancellation ratio remains at a high level. Domestic refined copper social inventories also show a continuous downward trend, below the same period last year. However, the center of copper prices has been rising recently, with downstream consumption sentiment cooling slightly and spot premiums adjusting downward. Everbright Futures noted that some traders, attracted by high premiums and demand in Southeast Asia, are actively seeking FOB supplies from smelters, but domestic downstream consumption lacks support.