Tariff policies triggered market fluctuations, with a divergence between the domestic and overseas markets, and sharp rises in gold, copper, and oil [Futures Market Monthly Report]

In March, the US Fed continued to hold steady, the US auto tariff was finalized, reciprocal tariffs were imminent, and global financial markets experienced significant volatility. The US stock market plummeted, with the S&P and Nasdaq indices recording their worst monthly performance since December 2022. The US dollar index fell to a five-month low, raising concerns about economic impact. The RMB exchange rate rose to a four-month high. The Shanghai Composite Index briefly broke through 3,400 points, setting a new high for the year. Domestic commodities fluctuated downward, with the Wen Hua Commodity Index hitting its lowest level since September last year. In January-February, China's package of existing and incremental policies continued to take effect, with rapid growth in industrial services, continued improvement in consumption and investment, and overall stable employment. In the US, February job growth was slightly below expectations, and policy uncertainty tested the resilience of the labor market. Non-farm payrolls increased by 151,000 last month, and the unemployment rate rose from 4.0% in January to 4.1%. The US Fed kept interest rates unchanged, with Powell stating that tariff policy is highly uncertain and there is no rush to cut rates. The European Central Bank, as expected, cut rates to 2.5% and left room for further easing. The central bank optimized its operational methods, with the MLF rate policy attribute fading. The economic development momentum improved, and the LPR remained unchanged for the fifth consecutive month. Domestic futures exchanges expanded the trading scope of QFII and RQFII, further opening up the futures market to high-level internationalization. The number of futures and options products open to foreign investment in China increased to 75. Global commodities generally rose in March, with industrial futures showing strong performance. LME copper rose to a six-month high, with a monthly increase of 3.51%. COMEX copper hit a record high as traders continued speculative buying based on US tariff expectations. US gold futures broke through $3,100, setting a new record high, with a monthly surge of over 10% due to trade tensions and US interest rate prospects. Oil prices bottomed out and rebounded, with NYMEX crude hitting a three-month low at the beginning of the month and Brent crude reaching a six-month low, but US crude futures rose to a one-month high by the end of the month. CBOT soybeans fluctuated significantly due to tariffs, with a monthly decline of 1.07%. The CRB index, which tracks global commodity trends, rose 2.48% in March. Domestic commodities showed significant divergence in March, with precious metals and non-ferrous metals leading the gains, while the ferrous metals series fluctuated downward. Iron ore hit a two-and-a-half-month low, with a monthly decline of 3.31%. Rebar hit its lowest level since September last year, with a monthly decline of over 5%, as end-use demand recovery fell short of expectations. Non-ferrous metals performed strongly, with SHFE copper hitting its highest level since May 2024, with a monthly increase of over 4%. SHFE tin showed strong performance due to the suspension of operations at Alphamin's Congo mine, with a monthly increase of 10.25%. Precious metals continued to surge, with SHFE gold setting a new record high on the last trading day, with a monthly increase of 8.58%, and SHFE silver hitting its highest level since May 2024, with a monthly increase of 8.32%. Tariff disturbances affected oilseeds, with Dalian soybean meal hitting a two-month low, with a monthly decline of 2.76%, while rapeseed meal initially surged and then pulled back, hitting the daily limit for two consecutive days, with a monthly increase of 1.36%. The Wen Hua Commodity Index, which tracks domestic commodity trends, fell 1.86% in March. Weak end-use demand pressured the ferrous metals chain, with coking coal and coke hitting near eight-year lows. In March, downstream construction sites gradually resumed operations, but the pace of resumption was slow, and the recovery of end-use demand fell short of expectations. Real estate companies remained cautious in land acquisition, and the area of real estate starts and construction continued to decline YoY. From a medium and long-term perspective, there is temporarily limited room for imagination in the demand for construction steel. On the supply side, various news about the reduction of crude steel production occasionally disturbed the futures market, but by the end of the month, the blast furnace capacity utilization rate and pig iron production of 247 steel mills both hit eight-month highs. Therefore, with the policy in a temporary vacuum, the marginal supply and demand of the industry weakened overall, and rebar futures once hit a six-month low, with differentiated impacts on the demand side, and the rebar-coil spread once expanded to 200 yuan. The raw material side was mainly dragged down by the decline in finished product prices, with limited expectations for pig iron production growth, also pressuring steel mills' demand for raw material procurement. In terms of iron ore, after the end of the hurricane impact, overseas iron ore shipments rebounded significantly, but port inventories declined, and the supply-demand structure was moderate, with a monthly decline of over 3%. After the 11th round of coke price cuts, market expectations for further declines remained, and futures prices fell to near eight-year lows, with a monthly decline of over 6%. Raw material coal mines have not yet revealed expectations for production cuts, and the traffic at Mongolian coal ports remains at a high level. Coking coal supply remains relatively loose, and with low profits for steel mills and losses for coke enterprises, the loose supply-demand pattern for coking coal remains unchanged. By the end of the month, futures prices hit a low of 985 yuan/mt, refreshing the near eight-year low, with a monthly decline of nearly 10%. The two meals showed divergent trends, with rapeseed meal once hitting a nine-month high. In March, the two meal futures showed a weak fluctuating trend, with soybean meal futures performing weaker, with a monthly decline of 2.76%, while rapeseed meal futures were relatively stronger, with a slight monthly increase of 1.36%, marking the fifth consecutive month of slight gains. Although domestic soybean inventories continued to decline in March, the accelerated harvest of Brazilian soybeans increased market supply expectations, with market expectations for April-May imports reaching 10 million mt and 10.65 million mt, far exceeding the same period last year. At the same time, the spot market for soybean meal showed moderate sentiment, with downstream feed enterprises mainly restocking based on rigid demand, and the continuous decline in spot prices also dragged down futures performance. Rising expectations of oversupply pressured the near-month contracts of soybean meal more significantly, while the far-month contracts showed resistance to declines due to tariff policy disturbances. Stimulated by the news of tariff hikes, rapeseed meal futures fluctuated sharply in March, with prices initially surging and then pulling back. China announced a 100% tariff on Canadian rapeseed meal starting March 20, and rapeseed meal surged to a nine-month high. However, the market lacked further support, and the most-traded contract price fluctuated downward after rising above 2,700. After the rapeseed meal tariff policy was officially implemented, market speculation cooled, and with loose supply in some regions and the rapeseed meal-soybean meal spread at historically low levels, the upward momentum of rapeseed meal prices was limited. The most-traded rapeseed meal 2505 contract fluctuated rangebound below 2,600. The USDA's quarterly grain stocks report released on Monday showed that as of March 1, US corn stocks fell YoY, while soybean and wheat stocks rose YoY. In addition, US farmers are preparing to increase corn planting area by 5% in 2025, reaching the highest level in 12 years, while reducing soybean planting area to the lowest level in five years. Non-ferrous metals surged and then pulled back. In March, the non-ferrous metals sector overall showed a trend of rising first and then falling, with some varieties' price centers moving upward. The external market was turbulent, with some US economic data softening, and the US Fed's policy expectations once turned dovish, with the US dollar index falling to a five-month low, generally boosting metal prices. In addition, the expectations and changes in US tariff policy remained the focus of market attention, especially the US 232 investigation on copper, which drove US copper to new highs, refreshing historical highs, and also boosted SHFE copper, with the most-traded contract hitting a high of 83,320 yuan, refreshing the near ten-month high. Domestically, the domestic economy started smoothly this year, and market expectations for policy benefits were strong, with a warm market atmosphere. Against the backdrop of the traditional peak season of "Golden March," downstream demand showed strong resilience, generally supporting non-ferrous metals. Earlier, copper futures fluctuated significantly, mainly driven by the resonance of supply-demand and macro factors. On the macro front, the US previously announced plans to impose a 25% tariff on steel and aluminum products, which once triggered market expectations that the US might subsequently impose tariffs on copper, which would increase US copper import costs and potentially push up US inflation. US copper prices were significantly stronger than LME and SHFE copper, but at that time, market expectations for the US tariff rate on copper were generally around 10%-15%. Subsequently, the US initiated a 232 investigation on copper, with officials hinting that the US tariff on copper could reach 25%, significantly higher than previous expectations, which would further increase future copper import costs, and the US copper price center continued to move upward, further boosting SHFE copper. On the supply-demand front, since the beginning of the year, domestic copper concentrate TCs turned lower and continued to decline, indicating that ore supply tightness continues, and the tightness has been transmitted to the smelting end. In March, Tongling Nonferrous Metals announced related responses, and it is reported that its smelters have taken measures such as production cuts, early and extended overhauls, and unplanned overhauls. There are expectations of reduced domestic refined copper supply, further pushing up copper prices. Downstream demand performed moderately against the backdrop of the peak season, and with increased export momentum, domestic refined copper social inventories once declined. However, with the continuous strengthening of copper prices, downstream showed fear of high prices, and by the end of the month, social inventories stabilized. In addition, with the tariff policy approaching implementation, market uncertainty increased, and US copper prices pulled back from highs at the end of the month, with SHFE copper also correcting. Oil prices fell first and then rose. In March, international oil prices showed a trend of falling first and then rising, with prices hitting new lows at the beginning of the month, then gradually rising, and slightly pulling back at the end of the month. Among them, US oil fell to a low of 65, and rebounded to around 70 by the end of the month, with a slight decrease in monthly trading volume. Brent crude oil continued to bottom out at the beginning of the month, with futures prices falling to around 68, hitting the lowest price in over three years, then fluctuating to recover the monthly losses. Domestic SC crude oil generally followed the external market trend, but the gains at the end of the month were partially erased, with little fluctuation in the market trading center. The main line of international oil market fluctuations in March was OPEC's oil production policy. At the beginning of the month, OPEC announced an increase in oil production from April 1 to maintain oil market stability. Market expectations of sufficient international oil supply triggered a sell-off of Middle East crude, pushing oil prices down. However, starting from mid-month, OPEC released a new compensatory production cut agreement, with the proposed production cut exceeding the planned production increase starting in April, easing market concerns about oil oversupply. The weak US dollar and the decline in US gasoline inventories during the month quickly warmed international oil market sentiment, helping oil prices stabilize. In addition, the US strengthened restrictions on Iranian energy exports in mid-month, raising Middle East geopolitical risks again, stimulating a broad surge in international oil prices. However, due to the US economic slowdown and tariff disputes in March, the international oil price center pulled back again at the end of the month. The chemical sector showed a weak correction. In March, the chemical sector overall corrected, with the chemical index falling over 4.5%, hitting a six-month low. Among them, the two alkalis led the decline, with soda ash falling over 12%, and the main contract falling below 1,400, hitting a new low for the year. Caustic soda continued to search for a bottom, with the main contract falling nearly 14%, filling the May contract rollover gap, and futures prices hitting the 2,500 mark. The rubber sector overall declined, with SHFE rubber and 20# rubber both falling over 6%, and BR rubber falling over 4%. Urea futures bucked the trend, with the main contract rising over 3.5%, but the market corrected with the sector at the end of the month. In March, the chemical sector overall weakened under external market disturbances, and the soda ash and caustic soda markets showed more significant declines due to their own supply-demand imbalances. Among them, the soda ash industry faced heavy oversupply pressure, and terminal glass performance was lukewarm, making it difficult to effectively improve the supply-demand pattern. Alkali plant inventories slightly declined, but inventory pressure remained. The logic of caustic soda supply-demand mismatch was falsified, with increased industry production adding to supply pressure, and terminal alumina continued to decline, overall suppressing industry chain morale. In terms of rubber, domestic rubber production areas began trial cutting in March, with supply expectations growing, while terminal tire companies slowed procurement, increasing rubber industry inventory pressure. During the month, urea units had many sudden overhauls, and some gas units delayed resumption, while spring fertilizer demand was concentrated, with tight supply-demand helping the market to fluctuate warmly.**US Fed Keeps Rates Unchanged, Powell Says Tariff Policy Highly Uncertain, No Rush to Cut Rates** The US Fed kept interest rates unchanged on March 19, as expected, although policymakers indicated they still anticipate a 50-basis-point rate cut for the remainder of the year. However, Fed Chairman Powell made it clear that they would wait for the Trump administration's policies to become clearer. "We are not in a hurry to take action," Powell said at a press conference following the Fed's latest policy meeting. He noted that uncertainty is "exceptionally high," and policymakers believe that slowing economic growth and rising inflation are at least partly influenced by President Trump's tariffs, which require opposite policy responses. "Our current policy stance is well-positioned to address the risks and uncertainties we face," he said, pointing to strong economic performance and a balanced labour market, with hiring and layoffs both at low levels. "The right thing to do is to wait for the economic situation to become clearer." **China's Economy:** Data released by the National Bureau of Statistics (NBS) on March 17 showed a steady and positive start to the economy in the first two months. From January to February, the value-added of industrial enterprises above designated size increased by 5.9% YoY, total retail sales of consumer goods rose by 4.0% YoY, and national fixed asset investment (excluding rural households) grew by 4.1% YoY. **Trade Data:** Customs data released on the 7th showed that China's total import and export value of goods trade in the first two months of this year was 6.54 trillion yuan, down 1.2% YoY. Exports reached 3.88 trillion yuan, hitting a record high for the same period, up 3.4% YoY, while imports stood at 2.66 trillion yuan, down 7.3% YoY. **Inflation Data:** Data released by the NBS on March 9 showed that the Consumer Price Index (CPI) fell by 0.2% MoM and 0.7% YoY in February, while the Producer Price Index (PPI) dropped by 0.1% MoM and 2.2% YoY. **Financial Data:** Financial data released by the People's Bank of China on March 14 showed that the broad money (M2) balance at the end of February was 320.52 trillion yuan, up 7.0% YoY. In the first two months, yuan-denominated loans increased by 6.14 trillion yuan. The stock of total social financing at the end of February was 417.29 trillion yuan, up 8.2% YoY, while the cumulative increase in total social financing in the first two months was 9.29 trillion yuan, 1.32 trillion yuan more than the same period last year. **Manufacturing Data:** In March, the impact of the Chinese New Year gradually faded, and corporate production and business activities accelerated. The manufacturing PMI, non-manufacturing business activity index, and composite PMI output index were 50.5%, 50.8%, and 51.4%, respectively, up 0.3, 0.4, and 0.3 percentage points from the previous month. All three indices continued to rise in expansion territory, indicating that China's economy maintained overall expansion. **Fund Flows:** Domestic commodities saw net fund inflows in March, with precious metals repeatedly hitting record highs and attracting significant capital. SHFE gold and SHFE silver saw inflows of 15.746 billion yuan and 6.205 billion yuan, respectively. SHFE copper also performed well, attracting over 8 billion yuan. As of March 31, the settled funds of the Wenhua Commodity Index stood at 3,054.99 billion yuan, an increase of 18.435 billion yuan from 2,870.64 billion yuan at the end of February. **April Focus:** The "golden March and silver April" period continues, with no shortage of risk events in the financial markets in April. The situation regarding reciprocal tariffs at the beginning of the month will be a market focus. On April 4, the US will release its March non-farm payrolls report, providing new clues for the Fed's monetary policy. On April 10, the agricultural market will see the release of the US Department of Agriculture's April supply and demand report, while China will also release its March inflation data on the same day. On April 14, China will release its March trade data, followed by March macro data and Q1 GDP data on April 16.