[SMM Analysis:The Back structure is difficult to sustain ]

After a panic-driven plunge in early April, SHFE copper quickly rebounded, reclaiming the 75,000-point level from an 8-month low in just one trading session, and continued to rise thereafter, filling the significant gap above. Recently, domestic spot copper concentrate TCs have continued to decline, and news of copper mine suspensions in Peru has emerged. Will the tight ore supply further support copper prices? Over the past two weeks, the destocking of domestic refined copper social inventories has accelerated. What are the main factors driving this? How long will the destocking trend last? Considering the current macro and supply-demand dynamics, can the rebound in copper futures be sustained? Webstock Inc.'s [Institutional Diagnosis] section invites SHFE copper futures experts to provide in-depth analysis. [Institutional Diagnosis]: Recently, domestic spot copper concentrate TCs have continued to decline, and news of copper mine suspensions in Peru has emerged. Will the tight ore supply further support copper prices? Wang Yunfei, Head of Investment Consulting Department at Shanjin Futures: Ore supply has recently experienced another phase of tightness. Currently, we believe the main impact remains at the sentiment level, as the effect of specific mine production cuts on the full year still requires further comprehensive observation of supply conditions. From our perspective, against the backdrop of high smelting output, we remain cautious about the supply disruptions caused by the mine level. Overall, we consider the reliability of this support to be unstable. Xiao Jing, Senior Researcher at SDIC Futures Research Institute: In Q1 and throughout April, the supply side has felt the impact of the mine-smelting game, with copper concentrate TCs deepening in negative territory to -$30, continuously providing bullish trading themes for the market. Since March, there have been numerous unexpected incidents at both the mine and smelter levels. In addition to the recent suspension of operations at Peru's Antamina copper mine due to an accident, overseas smelters such as Glencore's Chilean smelter and Southern Mexico Group's smelter have also reported production cuts or suspensions. The low TCs reality, along with themes such as early maintenance or sudden interruptions at smelters like Tongling Nonferrous, has been consistently reflected in the high average copper prices in Q1. However, the extremely low TCs have not led to effective production cuts at smelters. Domestically, for example, against the backdrop of sulfuric acid, by-products, and recycled copper scrap supplementation, SMM's domestic refined copper production in Q1 increased by 9.4%, adding over 270,000 mt, nearing 3.2 million mt. Meanwhile, statistical agencies generally revised down the MoM decline in domestic copper production in April. From a smelter production perspective, the impact of extremely low TCs on production in the first four months has been quite limited. Currently, it is expected that in May and June, as the peak season ends, consumption cools, and average prices decline, if TCs still show no signs of bottoming out, and imported copper scrap raw materials remain tight, smelters may take more proactive measures in maintenance and production cuts. This year, the cumulative growth rate of domestic smelter supply output will likely follow a similar trend to last year, gradually converging. We believe the price support from mine or smelting themes will weaken. Firstly, the impact of the suspension of Peru's major mine on actual production is relatively limited, as the ore processing system may continue to operate. Secondly, as we enter mid-year, the outline of the full-year copper concentrate supply will become more certain after dynamic adjustments. Currently, major copper-producing countries such as Chile, Peru, Congo, and Zambia have clear incremental targets for 2025. As domestic peak season consumption comes to an end, and the global economic growth outlook is significantly disrupted by US tariffs, the market will shift more pricing components to demand in May and June. Liu Chao, Senior Nonferrous Metals Researcher at BOC International Futures Research and Consulting Department: Peru's Antamina mine produced 435,400 mt of copper in 2023. The mine is jointly owned by Glencore, BHP, Teck Resources, and Mitsubishi Group, with a copper grade of 1.23% and a zinc grade of 1.03%. Due to the mine's significant global share of metal production, the sudden accident has caused some disruption to copper and zinc supply, driving copper prices higher again. The duration of the mine's suspension has not yet been finalized, and the short-term impact continues. In the long term, copper concentrate TCs continue to decline, and mine supply tightness is intensifying. Current copper concentrate TCs are significantly lower than the full-year long-term contract TCs, and the suspension of copper mines further strengthens the expectation of tight supply, supporting copper prices. Zhong Yuan, Investment Consulting Department at Anliang Futures: If we view TCs as an asset price, similar to stock prices that accelerate sharply before ending, the continuous decline of TCs in negative territory in 2025 is the final stage of the bullwhip effect transmission in the industry chain. At this stage, positive news for copper mines may reinforce the downward trend of TCs. Conversely, if positive news emerges and TCs do not fall, it may signal a bottoming out. [Institutional Diagnosis]: Over the past two weeks, the destocking of domestic refined copper social inventories has accelerated. What are the main factors driving this? How long will the destocking trend last? Wang Yunfei, Head of Investment Consulting Department at Shanjin Futures: We believe the recent continuous decline in refined copper inventories is mainly due to two reasons: First, the transfer of inventories under the tariff backdrop. From the inventory distribution, the proportion of domestic inventories in the global total has been declining recently, while US copper inventories have risen significantly. The transfer of inventories has undoubtedly accelerated the decline in domestic inventories. Second, the front-loading effect of domestic power copper consumption. Although the planned growth rate of power investment in 2025 appears to slow compared to 2024, data up to Q1 shows that the actual growth rate is significantly better than the same period in 2024, thus providing a significant boost to copper demand. The current destocking trend may slow down in the latter part of Q2. On one hand, the rush export effect brought by tariffs will fade, and overseas inventories will gradually face demand tests. On the other hand, the actual demand growth in China, especially in the power sector, may gradually slow down, and the off-season effect is expected to cool overall demand. Xiao Jing, Senior Researcher at SDIC Futures Research Institute: The reciprocal tariff turmoil had a significant systemic impact on LME copper during the Qingming Festival holiday, with substantial losses for overseas long-positioned funds. In contrast, the early-month copper price slide provided a favorable opportunity for domestic mid- and downstream players to restock. After SHFE copper quickly stabilized near 71,000, the price rebound was mainly supported by peak season consumption. During this period, spot price adjustments led the gains, and the Shanghai-Guangdong premium widened. By late April, SMM's domestic social inventories had also accelerated their decline to below 200,000 mt, close to the destocking levels of 2022 and 2023. Strong domestic consumption is mainly due to: 1) In response to Trump policy risks, the output inertia of various manufacturing sectors has been strong since Q4 last year, and most key tracked industrial products maintained high output and export growth rates in Q1; 2) This year's power grid investment has been strong, with the sector's investment growth rate reaching 24% in Q1, significantly boosting copper wire and cable demand; 3) Under the expectation of US tariffs on the copper industry, US copper prices hit highs, and the US-LME price spread widened, continuously attracting cross-border transfers of copper spot logistics, including from China. Under multiple factors, this year's peak season copper consumption has been strong. Looking ahead, the relatively resilient domestic sector remains the power grid, while other electromechanical products, as the largest export area to the US, face higher uncertainty. In March, the convergence of home appliance product growth rates was already observed, which will negatively impact copper consumption. We initially believe destocking may continue until mid-May, around the 150,000 mt level. Liu Chao, Senior Nonferrous Metals Researcher at BOC International Futures Research and Consulting Department: The decline in copper concentrate inventories is closely related to supply in South America. During the domestic summer, which is winter in South America, copper concentrate production declines, and domestic imported ore port arrivals decrease, leading to a drop in domestic ore inventories. It is expected that domestic ore shortages will persist until late August, when rising temperatures in South America will increase copper mine operating rates, boosting domestic ore supply. Zhong Yuan, Investment Consulting Department at Anliang Futures: Currently in the traditional peak season, periodic destocking is normal, but the statistics I have seen do not show a significant or accelerated destocking trend. Based on experience, destocking will likely continue at least until the end of the 2505 contract. [Institutional Diagnosis]: Currently, copper prices are still in a corrective rebound phase. Considering the current macro and supply-demand dynamics, can the rebound in copper futures be sustained? Wang Yunfei, Head of Investment Consulting Department at Shanjin Futures: From a macro perspective, there are no positive factors on the demand side. The slow progress of US tariff negotiations and the impact of rate hikes on demand will gradually manifest. Domestically, although policies are in place, their implementation remains highly restrained, and we believe this approach will not change in the short term, so a surge in demand is unlikely. On the supply side, although ore supply is tight, smelting output remains high. As long as there is no significant downward adjustment in annual mine output expectations, the full-year refined copper supply-demand balance is unlikely to show a deficit. Therefore, we conclude that copper prices have largely entered a phase of considerable fluctuation, with current prices at the upper end of the range, making further rebound unlikely. Xiao Jing, Senior Researcher at SDIC Futures Research Institute: SHFE copper extended its gains this week, but the most-traded contract has not yet effectively filled the Qingming Festival gap, indicating significant pressure at the gap level. The SHFE copper rebound is largely complete, and the market will likely return to fluctuation, while remaining vigilant against sudden statements from the US government. The impact of systemic shocks has shifted from short-term bursts to medium-term pressure, suggesting a need for greater imagination regarding overseas uncertainties. Copper remains an industrial metal, and with a shift in consumption expectations, it is more likely to be configured as a risk asset. Liu Chao, Senior Nonferrous Metals Researcher at BOC International Futures Research and Consulting Department: Current macro tariff wars and trade barriers have led to a downward revision of global economic growth, reducing overall demand. The pullback in the US dollar and China's policy front-loading have strengthened demand expectations, amplifying market uncertainty. On the fundamental side, US-China tariff increases have significantly impacted imported copper scrap, reducing domestic copper scrap supply. Supply shortages and insufficient demand have made the strong fluctuation characteristics of copper prices evident, and this structure is expected to continue. Zhong Yuan, Investment Consulting Department at Anliang Futures: For the full year of 2025, copper prices are likely to fluctuate considerably, with anything above 80,000 defined as a bubble! Therefore, after copper prices rebound to key levels, the momentum may be hindered!

On Wednesday, April 16, the latest report from the World Bureau of Metal Statistics (WBMS) revealed that global refined copper production in February 2025 reached 2.3037 million mt, while consumption stood at 2.3796 million mt, resulting in a supply deficit of 75,900 mt. From January to February 2025, global refined copper production totaled 4.6929 million mt, with consumption at 4.7514 million mt, leading to a supply deficit of 58,500 mt. In February 2025, global copper concentrate production was 1.5428 million mt. From January to February 2025, global copper concentrate production amounted to 3.1081 million mt. To learn more about the dynamics of the copper industry chain, you are cordially invited to attend the CCIE 2025 SMM (20th) Copper Conference and Copper Industry Expo, hosted by SMM, which will be grandly held in Nanchang, Jiangxi Province from April 22 to 25, 2025. ~ Over 3,000 industry elites, representatives from upstream and downstream enterprises of the copper industry chain, government officials, industry associations, third-party equipment, logistics and warehousing, as well as experts from universities and research institutions will gather together. The conference covers mines, smelting, copper processing, trade, recycling, and end-use applications, encompassing the entire copper industry chain. At the event, more than 100 exhibitors will showcase the latest achievements in copper processing and smelting equipment, high-quality raw material suppliers, and new-type copper-based materials, highlighting the innovation and vitality of the copper industry. The conference features a variety of exciting activities: the main forum focuses on global copper market trends, raw material supply, policy impacts, and market outlooks. Sub-forums delve into industry hot topics such as electrical power transmission and distribution, secondary copper, copper-based new materials, hardware and plumbing, and ESS. During the conference, a two-day field trip will visit 12 representative enterprises in the copper industry, with a cumulative production of 1 million mt, to share cutting-edge technologies and valuable experiences, promoting the upgrading of the copper industry chain and driving high-quality industry development. The CCIE 2025 SMM (20th) Copper Conference and Copper Industry Expo will help you grasp industry trends, expand your network, and explore business opportunities! SMM sincerely invites you to join us in Nanchang, Jiangxi Province from April 22 to 25, 2025, to gather in the new era of copper and jointly plan for new development!

In mid-March, US copper prices surged strongly, hitting a record high, while SHFE copper also steadily broke through the 80,000 yuan/mt mark. The robust market performance greatly boosted investor enthusiasm. Looking back at this round of market trends, the driving factors are numerous and complex. Since the beginning of this year, the supply of copper mines and raw materials has remained tight, gradually transmitting downstream and prompting initial production cuts at smelters. The "stockpiling" frenzy triggered by US tariff policy risks has driven US copper prices to continuously refresh highs, subsequently pushing up LME and SHFE copper prices. Although the weakening overseas macro environment has limited the upside potential of copper prices, the resilience of short-term fundamentals is sufficient to drive further price increases. However, if the implementation of tariff policies falls short of expectations, copper prices may return to fundamental pricing, potentially leading to a high-level pullback. Investors should pay attention to risks. At the March US Fed meeting, the Fed announced that it would maintain the federal funds rate target range between 4.25% and 4.50%, a decision highly in line with market expectations. The Fed's slowing pace of balance sheet reduction has continuously improved market liquidity expectations, leading to a stabilization of risk assets such as US stocks and Bitcoin, while the US dollar index has remained at low levels, sustaining the trend of monetary easing. Meanwhile, the US government announced plans to impose a 25% tariff on imported copper, sparking strong concerns about a significant rise in future import costs. Global suppliers, aiming to avoid potential risks, have accelerated the transportation of copper semis into the country, significantly boosting demand expectations in the US market and driving a rapid rise in US copper prices. Domestically, demand-side performance in the first three months has been positive, with the copper market showing active demand and resilient production. Signs of domestic demand gradually "taking over" from external demand have begun to emerge. After the conclusion of the Two Sessions, the clear tone of proactive fiscal policy and moderately loose monetary policy has sent a strong signal of macro policy intensification to stabilize growth, greatly enhancing market confidence. Additionally, the domestic asset revaluation wave triggered by DeepSeek continues to ferment, continuously improving market expectations and effectively driving further economic recovery. A series of follow-up measures to boost consumption are accelerating, and the introduction and implementation of the "Special Action Plan to Boost Consumption" are expected to inject a strong stimulus into the consumer market, forming a more robust support. Supply side, disturbances in the smelting sector have become increasingly significant in the short-term impact on copper prices. With spot TC for copper concentrates at historically low levels, a major domestic smelter announced production cuts at its smelter with an annual capacity of approximately 470,000 mt. From a long-term perspective, the domestic government has tightened regulations on new copper smelters, aiming to effectively curb capacity issues. In the future, only a few large enterprises are expected to meet the stringent entry thresholds, which undoubtedly means that domestic refined copper supply will gradually tighten. China's copper smelting industry is highly dependent on imported concentrates. Relevant data shows that domestic copper concentrate production in 2024 was only 1.64 million mt in metal content, while domestic refined copper production reached 13.24 million mt, with a copper mine self-sufficiency rate of only 12.4%. Entering 2025, copper concentrates are constrained by multiple factors such as production disruptions, declining grades, and rising exploration costs, and the tight supply issue has not been substantially alleviated. Several miners have successively cut production or lowered their 2025 production guidance. According to data from miners with updated annual reports, the 2025 production guidance increase is only 210,000 mt, a 47% decrease compared to the 2024 increase. We have revised down the 2025 mine supply growth rate to 1.5%, slightly lower than the 1.8% growth rate in 2024. Demand side, copper consumption in 2025 will continue to exhibit high resilience, with the accelerated long-term green energy transition further exacerbating the supply-demand imbalance in the copper market. Each gigawatt of solar or wind power installed capacity requires nearly 5.5 mt of copper, three times the amount used in fossil fuel infrastructure. Strong demand from emerging fields such as NEVs (80 kg of copper per vehicle), AI computing centers (1.36 mt of copper cables per server), and UHV power grid construction is expected to drive the proportion of new energy copper usage to exceed 20% in 2025 and over 30% by 2030, highlighting the urgency of expanding copper production. In the short term, during the traditional peak demand season of "Golden March and Silver April," downstream purchase sentiment has improved significantly MoM, with tight spot supply in the market. As copper prices continue to rise, downstream purchase willingness has gradually weakened, with strong fear of high prices, and most purchases are based on rigid demand. However, if copper prices pull back, downstream purchase enthusiasm is expected to rebound quickly. Global consumption growth in 2025 is expected to reach 3.4%, with demand growth outpacing supply growth, providing solid support for copper prices. In summary, tight raw material supply continues to pressure the supply side, and the effects of smelter production cuts continue to ferment, leaving copper prices with some room for further increases. (Source: Futures Daily) To learn more about the dynamics of the copper industry chain, you are welcome to attend the CCIE 2025 SMM (20th) Copper Conference and Copper Industry Expo, hosted by SMM, which will be grandly held in Nanchang, Jiangxi from April 22-25, 2025. CCIE 2025 SMM (20th) Copper Conference and Copper Industry Expo ~ Over 3,000 industry elites, representatives from upstream and downstream enterprises in the copper industry chain, government officials, industry associations, third-party equipment, logistics and warehousing, and academic experts will gather together. The conference covers the entire industry chain, including mining, smelting, copper processing, trade, recycling, and end-use applications. At the conference, more than 100 exhibitors will showcase the latest copper processing and smelting equipment, high-quality raw material suppliers, and new-type copper-based materials, highlighting the innovation and vitality of the copper industry. The conference features a variety of exciting activities: the main forum focuses on global copper market trends, raw material supply, policy impact analysis, and market direction interpretation. Sub-forums delve into industry hot topics in areas such as electrical power transmission and distribution, secondary copper, new copper-based materials, hardware and plumbing, and ESS. During the conference, there will also be a two-day field trip to 12 representative enterprises in the copper industry with a cumulative capacity of 1 million mt. Sharing cutting-edge technologies and valuable experiences, the event aims to upgrade the copper industry chain and promote high-quality industry development. CCIE 2025 SMM (20th) Copper Conference and Copper Industry Expo Helps you grasp the industry pulse, expand your network, and seek business opportunities! SMM cordially invites you to gather in Nanchang, Jiangxi from April 22-25, to unite in the new era and jointly plan for new development!

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.

Recently, the daily performance of SHFE copper has not been outstanding, but the futures price has been steadily climbing, continuously refreshing its stage highs, and is now not far from its historical peak. What has enabled copper prices to be so stable? Is the "engine" behind it still powerful? The US Tariff Hike Expectation on Copper Continues, Driving Domestic Market with Strong US Copper Performance The anticipation of the US imposing tariffs on imported copper can be traced back to early February, when the US announced plans to impose a 25% tariff on steel and aluminum products, sparking market expectations that the US might subsequently impose tariffs on copper. This would increase the import cost of US copper and potentially push up US inflation. As a result, US copper prices have been significantly stronger than LME and SHFE copper prices, although the market initially expected the tariff rate on copper to be around 10%-15%. Later, the new US President signed an executive order directing the Department of Commerce to investigate whether copper imports and foreign copper production pose risks to the US economy and national security. Some officials hinted that the US tariff on copper could reach 25%, significantly higher than previous expectations, which would further increase future copper import costs. The center of US copper prices continues to rise, and the premium over LME copper has recently stabilized above $1,000. Mid-week, there were reports that the US government is rapidly conducting a review, and the US might impose tariffs on imported copper within weeks, several months earlier than expected. The US copper rally reignited, hitting a high of $5.374, a record since its listing, and the premium over LME copper also reached a historical high. The exceptional strength of US copper has created more arbitrage opportunities and boosted SHFE copper prices. Additionally, in anticipation of potential high tariffs, copper from around the world has been flowing into the US recently, leading to a continuous decline in LME copper inventories and persistently high cancellation rates. Meanwhile, domestic refined copper exports in February showed signs of recovery, which might reduce domestic supply and also support SHFE copper prices. Currently, the premium of US copper over LME copper remains high, indicating that the market is still trading on related expectations. However, the recent pullback in US copper prices suggests that as the tariff policy approaches implementation, market divergence has increased, and uncertainty has also risen. Caution is needed regarding the potential impact of sentiment pullback and possible expectation gaps after the policy is implemented. Tight Ore Supply Extends to Smelting Sector, Focus on Domestic Smelter Operations During Maintenance Season The long-term contract processing fees agreed between domestic smelters and overseas miners at the end of last year were only slightly above $20/dmt, already hinting that the tight supply of domestic copper ore would continue this year. From the production guidance of major overseas miners for 2025, the new copper ore production is also lower than previous expectations. Since the beginning of this year, the spot processing fees for domestic copper concentrates have continued to decline, falling into negative territory in early February and failing to stabilize, instead continuing to drop, recently reaching below -$20, repeatedly setting record lows. Under such extremely low processing fees, domestic smelters face increasing production pressure, and the profits from long-term contract benchmarks are also very limited, exacerbating the difficulties for smelters. Mid-month, news from Tongling indicated that its smelters have taken measures such as production cuts, early and extended maintenance, and unplanned major repairs, leading to expectations of reduced domestic refined copper supply, which once boosted copper prices. Recently, there have been many disruptions in the ore sector. Early last week, Freeport Indonesia announced that it had obtained an export permit for 1.27 million mt of copper concentrates, and further attention is needed on whether Indonesian copper ore exports to China will increase. The restart of First Quantum's Cobre Panama mine, which the market is closely watching, remains difficult. Regardless, as of now, the negative spot processing fees for copper concentrates continue, and Q2 is traditionally the period for concentrated maintenance of domestic smelters. Further attention is needed on the trend of processing fees and the maintenance schedules and production arrangements of other smelters. If more supply disruption news emerges, copper prices will still have upward momentum. Compared to domestic smelters, overseas smelters have higher costs, and some companies are facing tight cash flow. Recently, Glencore announced that its Altonorte smelter in Chile has declared force majeure on copper shipments, and it is reported that the smelter has suspended production. Chile is one of the main sources of US copper imports, and with global copper flowing into the US, supply disruptions from Chilean smelters could lead to tighter copper supply and demand in other regions. Domestic Refined Copper Social Inventory Declines, but the Pace of Decline Slows "Golden March and Silver April" is traditionally the peak demand season for the domestic copper market, and with recent favorable domestic policies and a stable start to the national economy, as an industrial base metal, domestic refined copper social inventory has been continuously declining since early March. Along with the continuous rise in copper prices, the decline continues, and current social inventory levels are lower than the same period last year. However, it is worth noting that the decline in inventory is not only due to downstream rigid demand but also to increased exports from smelters. As mentioned earlier, overseas copper prices have been relatively stronger than domestic prices recently, and there is a trend of copper flowing into the US, leading to increased export momentum from domestic smelters. Therefore, the decline in inventory cannot be entirely attributed to robust downstream demand. Recently, SHFE copper has been on a continuous upward trend under multiple factors, with futures prices steadily breaking through the 80,000 yuan mark. High prices have made downstream procurement more cautious, and spot prices have shifted from a slight premium to a slight discount, with the price difference between primary metal and scrap widening, potentially increasing the substitutability of copper scrap consumption. The latest institutional data shows that the decline in domestic refined copper social inventory has slowed, and even SMM data shows a slight increase in social inventory compared to Monday. The acceptance of high prices by downstream companies still needs attention. Overall, the expectation of the US imposing tariffs on imported copper has made US copper prices exceptionally strong, greatly driving SHFE copper prices. The copper market's own supply and demand fundamentals also provide strong support, with tight ore supply already affecting smelters, and downstream demand remains resilient during the peak season. Copper prices have been steadily breaking through. Now, as the tariff policy is about to be implemented, market uncertainty has increased, with US copper prices consolidating at high levels and SHFE copper prices pulling back. However, unless the US tariff on copper is significantly lower than expected, copper prices are still more likely to rise than fall.