SMM: As the negative impact of tariffs gradually weakens, medium and long-term fundamentals may drive copper prices to decline first and then rise [[SMM Copper Conference]]

**English Translation:**

On April 23, at the **CCIE-2025 SMM (20th) Copper Industry Conference & Copper Industry Expo – Main Forum**, jointly hosted by **SMM Information & Technology Co., Ltd. (SMM)**, **SMM Metal Trading Center**, and **Shandong Aisi Information Technology Co., Ltd.**, with **Jiangxi Copper Corporation** and **Yingtan Land Port Holdings Co., Ltd.** as co-sponsors, **Shandong Humon Smelting Co., Ltd.** as a special co-organizer, and **Xinhuang Group** and **Zhongtiaoshan Nonferrous Metals Group Co., Ltd.** as co-organizers, **Ye Jianhua, Big Data Director of SMM**, shared insights on the theme "Copper: Micro-Driven Forces and Macro Volatility."

**Macro: Turbulent and Unpredictable**
- Global manufacturing PMIs of major economies mostly remained below 50. Geopolitical conflicts and US tariff policies drove down the copper/gold ratio, reflecting strong market risk aversion.
- The US economy faced "stagflation" and "recession" fears, disrupting global asset prices. Analyses incorporated US long- and short-term Treasury yields, non-farm payroll changes, University of Michigan consumer sentiment/status/expectations indices, and Markit manufacturing/services PMIs.
- Key European economic indicators began improving, with large-scale infrastructure investment funds launched to boost the economy. Topics covered included gradual eurozone interest rate cuts and slowing declines in construction/retail confidence.
- Domestic consumer markets require further stimulation, while export markets face greater challenges despite rapid local government bond issuance. Discussions referenced rising real estate inventory, negative growth in construction/completion areas, export data, and monthly local bond issuance.
- US reciprocal tariffs, targeting "trade deficits" and aimed at addressing its $36 trillion+ debt, introduced significant market volatility.

**US Reciprocal Tariff Details:**
- At 4:00 AM Beijing time on April 3, a 10% baseline tariff was imposed on ~60 countries with major US trade imbalances, effective 00:01 AM Eastern Time on April 5. Equalization tariffs followed on April 9.
- Canada and Mexico were exempted, with previous delayed tariffs to take effect soon. USMCA-compliant goods retain exemptions.
- Items already subject to Section 232 tariffs (25% on steel/aluminum, autos/parts, copper, pharmaceuticals, semiconductors, timber, energy) remain unaffected.

**Supply: Global Copper Supply Tightening**
- Copper concentrate shortages worsen; short-term supply-demand imbalances persist. Analyses included 2021-2030 global copper concentrate supply-demand balances (with disruption rates), annual long-term contract TC benchmarks, and smelter feedstock competitiveness.
- In 2024, US secondary copper raw material exports exceeded 900,000 mt of physical tons (~700,000 mt metal content).
- Domestic scrap copper supply increasingly relies on self-produced growth, with smelter-bound flows rising.
- COMEX prices surged under tariff expectations, with the US absorbing global copper cathode. Key indicators: LME-COMEX price spreads, LME registered/cancelled warrant ratios, global exchange copper inventories, and total COMEX copper stocks.
- China's copper cathode imports from Chile/Peru declined sharply, with African imports expanding.
- Falling imported copper supplies accelerated domestic cathode inventory drawdowns. Data sources: SMM China cathode production, spot import profit/loss & Yangshan premiums, cathode imports, and social inventories.

**Demand: Diverging End-Use Structures**
- While US trade dependence declines, it remains China's largest single trading partner (14.7% of total exports in 2024).
- Asia dominates China's copper semis exports, vulnerable to US coercion. US scrap copper imports to China will drop significantly in 2025.
- Copper semis exports to North America reached 60,000 mt (7.4% of total) in 2024; ~20% of China's scrap imports originated from the US.
- State Grid Corporation of China plans 650+ billion yuan investments in 2025 (+7% YoY vs. 2024 actuals).
- Construction/real estate sectors remain in contraction, failing to support copper consumption. SMM forecasts a 2% YoY decline in construction copper use in 2025.
- "Export rush" demand persists; traditional peak-season domestic growth keeps copper pipe operating rates high, though export concerns mount.
- April copper pipe operating rate forecast: 85.81% (+0.58pp MoM, -0.72pp YoY). Pre-tariff export rushes and strong March copper pipe/air-conditioner exports drive activity. Domestic sales will strengthen during peak season, but tariff impacts may slow export growth, with rates stabilizing at highs.

**Medium-Long Term: New Energy Remains a Key Growth Driver**
**Global Copper Balance & Price Outlook**
- **2025Q1**: Pre-Trump tariff risk sentiment elevated copper prices. COMEX rallied on tariff fears, widening LME-CME spreads. Robust US data and inflation expectations supported commodities. Domestic stimulus policies and expected mine deficits/production cuts boosted prices.
- **2025Q2**: Tariff implementation and Chinese retaliation triggered a copper price crash amid economic damage fears. Domestic stimulus may counterbalance, with prices recovering on US destocking, low inventories, and backwardation-driven squeeze risks, though retesting 80,000 yuan/mt is unlikely.
- **2025Q3-Q4**: Trade war sentiment fades, but high tariffs risk recession and surplus refined copper. Q3 faces smelter cuts and weak demand; Q4 may see price rebounds from fiscal policies, mine/refined shortages, and improving global sentiment.

*Click to view CCIE-2025 SMM (20th) Copper Industry Conference & Expo Special Report*