The US Fed's hawkish stance led to copper prices jumping initially and then pulling back [SMM Copper Morning Meeting Summary]

Futures market: Overnight, LME copper opened at $9,127.0/mt, hitting a high of $9,216.5/mt and a low of $9,028.5/mt, and closed at $9,190.2/mt (previous close: $9,137/mt). The overall trend showed initial fluctuations downward followed by a significant upward fluctuation, with a gain of 0.58%. Open interest stood at 290,126 lots. Overnight, the SHFE copper 2506 contract opened at 75,450 yuan/mt, hitting a high of 76,120 yuan/mt and a low of 75,340 yuan/mt, and closed at 76,090 yuan/mt. The overall trend was upward with fluctuations, gaining 0.71%. Trading volume was 54,130 lots, and open interest was 159,570 lots, with a daily increase of -1,127 lots (a decrease of 0.70%).

[SMM Copper Morning Meeting Summary] News: (1) At 01:30 AM Beijing time on Thursday, Fed Chairman Powell will deliver a speech on the US economic outlook at the Chicago Economic Club. The market is expected to closely monitor his remarks for clues on potential interest rate cuts and progress on regulatory reforms encouraging banks to increase holdings of US Treasuries. So far, the Fed has maintained a "wait-and-see" stance, with Powell reiterating a conservative stance on rate cuts in his latest remarks. Meanwhile, according to sources citing the latest media reports, the Fed is resisting pressure from the White House and Washington and has not accelerated regulatory reforms to encourage banks to increase holdings of US Treasuries.

(2) Ukrainian President Zelensky stated in a routine video address that First Deputy Prime Minister Svyrydenko reported on the progress of negotiations on mineral agreements. The Ukrainian government team has achieved positive results in cooperation with the US on the economic partnership agreement, and related legal matters have been largely finalized.

Spot: (1) Shanghai: On April 16, SMM #1 copper cathode spot prices against the front-month 2505 contract were at a premium of 70-120 yuan/mt, with an average premium of 95 yuan/mt, up 55 yuan/mt MoM. Today, unmatched delivery warrants are expected to flow out gradually, and with a firm backwardation, suppliers may continue to face price pressure. The trading center is expected to continue to decline slightly intraday.

(2) Guangdong: On April 16, Guangdong #1 copper cathode spot prices against the front-month contract were at a premium of 50-110 yuan/mt, with an average premium of 80 yuan/mt, up 25 yuan/mt MoM. Overall, with inventories declining for 10 consecutive days, suppliers are bullish on the market outlook, and spot premiums have risen significantly. Attention is focused on future arrivals.

(3) Imported copper: On April 16, warrant prices were at $82-90/mt, QP May, with an average price down $1/mt MoM; B/L prices were at $98-108/mt, QP May, with an average price down $1/mt MoM. EQ copper (CIF B/L) was at $55-65/mt, QP May, with an average price flat MoM, referencing arrivals in mid-to-late April. Overall, arrivals in late April are gradually increasing, and market transactions have improved, but the SHFE/LME price ratio remains unfavorable, with buyers offering lower prices. Meanwhile, there will still be demand for long-term contracts in May.

(4) Secondary copper: On April 16, secondary copper raw material prices fell by 200 yuan/mt MoM. Guangdong bare bright copper prices were at 70,600-70,800 yuan/mt, down 200 yuan/mt from the previous day. The price difference between copper cathode and copper scrap was 432 yuan/mt, down 173 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 315 yuan/mt. According to the SMM survey, as copper prices pulled back, secondary copper raw material suppliers chose to stand firm on quotes. Secondary copper rod enterprises reported that intraday bare bright copper prices excluding tax were only 100-200 yuan/mt lower than copper cathode prices excluding tax, while copper cable scrap (Cu＞99.5%) prices even exceeded copper cathode prices excluding tax. Since April 7, secondary copper rod sales have been losing 100-200 yuan/mt, and secondary copper rod enterprises have had to raise their selling prices. Intraday, secondary copper rods meeting national standards in Jiangxi were quoted at a premium of 250-350 yuan/mt, with flat transactions.

(5) Inventories: On April 16, LME copper inventories increased by 3,775 mt to 216,250 mt; on April 16, SHFE warrant inventories increased by 9,135 mt to 101,344 mt.

Prices: On the macro front, Fed Chairman Powell stated: "Policy is in a good place, and we need to wait for clearer data before considering adjustments. Cryptocurrencies are gradually becoming mainstream, and related regulations are expected to be relaxed. Tariffs are likely to stimulate a temporary rise in inflation, and the impact may last for a long time. The current trend is rising inflation and unemployment. Do not expect the Fed to intervene in the stock market's sharp decline. Trump's policies are constantly changing, and tariffs are higher than the Fed's highest estimates. It is understandable that the market is facing difficulties." The market's wait-and-see attitude towards the new US trade agreement and Powell's refusal to rescue the market weighed on the US dollar. Overnight, copper prices closed higher. Meanwhile, OPEC received updated compensatory production cut plans from eight countries, with daily oil production cuts of 305,000 barrels/day until June 2026. Rising crude oil prices also supported copper prices. Domestically, in Q1, GDP was 31,875.8 billion yuan, up 5.4% YoY. On the fundamentals, copper prices jumped initially and then pulled back yesterday. With a firm backwardation, spot transactions were generally deadlocked. Today, the trading center is expected to continue to decline. Overall, copper prices are expected to find support today.

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[The above information is based on market collection and comprehensive evaluation by the SMM research team. The information provided in this article is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]