Reciprocal Tariffs Shake the Market, Copper Prices Adjust Downward [Institutional Commentary]

On Monday, the most-traded SHFE copper 2505 contract fluctuated downward, while LME copper pulled back to $9,700 last night. The COMEX copper premium narrowed, and the domestic near-month 4-5 spread shifted to a B structure. The spot copper market saw slightly improved trading on Monday, as the pullback in copper prices stimulated downstream restocking. Spot premiums rose to 15 yuan/mt, and LME inventory dropped to 211,000 mt yesterday.

On the macro front, a White House secretary stated that the US President will announce his reciprocal tariff policy this Wednesday. Goldman Sachs expects the policy to impose a 15% reciprocal tariff on all trading partners, higher than the previously anticipated 10%. We believe the risk of US economic stagflation is accelerating and will face a series of countermeasures from partner countries, reinforcing expectations of a global economic slowdown. Additionally, Trump warned that if Russia and Ukraine fail to cease fire and the mine agreement remains deadlocked, secondary tariffs of 25%-50% will be imposed on Russian oil, further fueling market避险情绪.

US Fed official Williams noted that policymakers generally believe tariff hikes will pose upside risks to the inflation outlook. The Fed will closely monitor core data, particularly prices and economic activities in tariff-affected industries. Maintaining moderately tight monetary policy is currently appropriate.

On the industry side, Codelco (Chile’s National Copper Corporation) reported that its refined copper exports to the US in Q1 increased 50% YoY.

The rebound in US core inflation constrains the Fed’s room for interest rate cuts. Overseas investment banks expect the benchmark rate for reciprocal tariffs to reach 10%-15%, further elevating expectations of US economic stagflation and a global economic slowdown. On the fundamentals side, the tightening mine supply situation remains unchanged, with TC negative values widening. The center of social inventory has slightly shifted downward, but the current trading focus is not on fundamentals. Copper prices are expected to maintain a downward fluctuation in the short term, with attention on overseas trade developments.

(Source: Jinyuan Futures)