Precious metal traders at top-tier banks, including JPMorgan Chase and Morgan Stanley, have just achieved their best performance in five years in the first quarter, partly due to arbitrage opportunities that triggered a significant influx of gold bars into the US. According to data compiled by Crisil Coalition Greenwich, 12 major banks in the industry collectively generated $500 million in revenue from precious metals businesses in Q1 2025, the second-highest figure in a decade. The market intelligence firm stated that this figure is roughly double the average quarterly earnings over the past decade. Part of this windfall came from the high premium on gold in the US market during Q1, as concerns about potential US tariffs on precious metals led traders to rush large quantities of gold and silver into the US in advance. As previously reported by Caixin, in Q1, the prices of gold and silver futures on the New York Mercantile Exchange (Comex) surged to levels significantly higher than those of London gold, the international benchmark. This meant that traders could purchase gold bars in trading centers such as London, Switzerland, or Hong Kong, China, and then ship them to the US to profit before tariffs took effect. This even led to weeks-long queues for gold bar withdrawals from the Bank of England's vaults. Officials overseeing the London gold market received anxious calls from many bankers and traders, urging for streamlined processes. A similar situation occurred in 2020, when the COVID-19 pandemic grounded commercial flights, creating sustained arbitrage opportunities for banks seeking ways to transport gold bars to New York. According to exchange data, Morgan Stanley delivered more gold than any other bank when settling its proprietary Comex positions, delivering a total of 67 mt of gold. At current market prices, this batch of precious metals is valued at approximately $7 billion. In addition, JPMorgan Chase, as a major trader of precious metals, once delivered gold worth over $4 billion to settle gold futures contracts in February, marking the largest single-day delivery notice in Comex history. Arbitrage trading only came to an abrupt halt in April after gold was excluded from Trump's reciprocal tariff plan. Many banks engaged in gold and silver trading—particularly JPMorgan Chase—have historically excelled at profiting from transatlantic price dislocations. Five years ago, unprecedented arbitrage opportunities helped JPMorgan's metals trading division achieve record revenues of $1 billion in 2020. Angad Chhatwal, Head of Fixed Income, Currencies, and Commodities (FICC) at Coalition, stated that the volatility triggered by Trump's tariff plan also generated revenue for these 12 major banks. In recent years, amid the astonishing surge in gold prices, which have doubled since the end of 2022, trading volumes in the London market have also been growing.

Since April, the most-traded SHFE copper contract prices have shown a trend of initial decline followed by a rebound, with copper prices gradually recovering after hitting a low of 71,000 yuan/mt. Meanwhile, arbitrage trading in the LME copper and COMEX copper markets has weakened, while domestic copper smelters have increased maintenance activities, leading to a rapid drawdown in social copper inventory and providing support for copper prices. Supply side remains tight. In December 2024, China's copper concentrate production reached 151,800 mt, up 6.89% YoY and 9.51% MoM. In March 2025, China imported 2.3939 million mt of copper concentrates and ore, up 9.69% MoM and 2.73% YoY. This year, China's copper concentrate production has been at a relatively low level, while imports have remained relatively stable, resulting in an overall decline in copper concentrate supply. In late April, Peru's Antamina mine halted operations entirely due to a sudden accident. The mine produced 426,900 mt of copper ore in 2024, accounting for 1.86% of global copper ore production, which will have a certain impact on global copper ore supply. In terms of inventory, as of April 18, the copper concentrate inventory at major domestic ports stood at 706,900 mt, at a moderate level, while the processing fee for imported ore continued to decline, falling to -$34.71/mt, a record low. According to data from relevant institutions, from 2021 to 2025, the global copper concentrate capacity additions have accelerated, but in the next three years, the growth rate of global copper concentrate capacity additions will decline rapidly, potentially exacerbating the global copper concentrate supply tightness in the later period. As of February this year, China's copper scrap production reached 115,800 mt in metal content, up 4.99% MoM and 60.83% YoY. According to March data, China's imports of copper scrap and shredded copper scrap reached 189,700 mt, down 3,631 mt MoM and 13.07% YoY. Among them, imports from the US were 22,500 mt, down 8,900 mt MoM. With the intensifying impact of the "trade war," China's copper scrap imports may decline in the later period, leading to a tight supply-demand structure for copper scrap. In February, China's blister copper production was 911,500 mt, down 2.96% MoM and up 10.74% YoY. Among them, mine-produced blister copper decreased by 26,500 mt from January to 738,700 mt, while scrap-produced blister copper decreased by 1,300 mt to 172,800 mt. In March, China imported 50,200 mt of copper anode, down 11.05% MoM and 47.8% YoY. In March, China's copper cathode production was 1.1221 million mt, up 6.04% MoM and 12.27% YoY. Entering April, due to the tight supply of copper concentrates, some smelters began to reduce the feedstock of copper concentrates, but by increasing the feedstock of copper scrap and anode plates, they maintained stable copper cathode production.Additionally, new smelters have commenced operations in east China, while the capacity utilization rate of smelters in south-west China has increased, leading to a slight decline in the total production of copper cathode. Due to significant losses in the industry, the operating rate of domestic smelters remains relatively low, and import losses have also suppressed the supply of imported copper. Overall, despite an increase in copper cathode production, the overall supply pressure remains relatively small. In terms of subsequent capacity increments, it is projected that China will add 1.17 million mt of new copper refining capacity in 2025, with overseas capacity additions reaching approximately 870,000 mt. Among these, the Kamoa mining area, jointly held by Ivanhoe and Zijin Mining, will contribute the largest overseas capacity increment. Operating rates in downstream sectors rebound In 2025, China's fiscal policy will become more proactive. Specifically, the scale of ultra-long-term special treasury bonds is expected to increase from 1 trillion yuan to 2 trillion yuan, while the scale of new special local government bonds is anticipated to rise from 3.9 trillion yuan to 4.5 trillion to 5 trillion yuan. With the continuous strengthening of fiscal policy, it is expected that infrastructure investment in 2025 will continue to fluctuate at highs in recent years, with investment growth rates projected to stabilize at 5% to 10%. Infrastructure investment will remain one of the main driving forces for industrial product demand in 2025. In December 2024, China's copper semis production reached 2.27 million mt, up 6.2% MoM and 16.53% YoY. The operating rate of enterprises in the copper semis industry stood at 69.02%. Affected by the Chinese New Year holiday, the operating rate of the copper semis industry was low in January and February but gradually rebounded to 67% in March. With the recovery of downstream consumption, the operating rate of downstream processing enterprises in the copper industry continued to rebound. Entering April, copper prices fell sharply, stimulating an increase in downstream orders. It is expected that the operating rate of enterprises in the copper semis industry will continue to rise, but attention should be paid to the impact of US tariff policies on China's copper consumption. Additionally, the YoY data for overall power grid and NEV production both showed slight increases, providing further bullish support for copper cathode demand. Bulls take the initiative in forward contracts In April, the growth rate of COMEX copper inventories accelerated, approaching 130,000 short tons as of April 23. Domestically, as of April 24, social copper inventories stood at 181,700 mt, achieving eight consecutive weeks of weekly destocking, down 195,300 mt from the year's high and 223,000 mt lower than the 404,700 mt recorded in the same period last year. In April, the decline in LME copper inventories slowed down, hovering around 210,000 mt, with the ratio of cancelled warrants dropping from a high of 50% to 37%. As of April 18, both non-commercial long and short positions in COMEX Grade 1 copper decreased from the previous week, with net long positions falling by 4,764 lots to 19,477 lots. Meanwhile, both long and short positions in LME copper investment funds increased, with net long positions rising by 1,479 lots to 29,842 lots.The domestic futures market exhibits a contango structure, with bulls taking the initiative in the deferred contracts, indicating that major funds are optimistic about future prices. From the perspective of the supply-demand balance table, with the arrival of the peak consumption season, downstream demand is rebounding while upstream supply is pulling back. The supply-demand structure is gradually improving, and the probability of a supply-demand gap emerging in Q2 is rising. Against this backdrop, market optimism is heating up, providing certain bullish support for prices. From a macro perspective, based on the economic data released by the US in March, indicators such as the ISM Manufacturing PMI, CPI, and PPI have shown robust performance. The impact of US tariff policies is expected to be reflected in April's data, and subsequent attention should be paid to the progress of negotiations between the US and other countries. On the supply side, the tight supply situation of copper raw materials has intensified, with processing fees for imported copper concentrates continuing to decline, and tariff policies affecting the imports of copper scrap. Currently, the extent of production cuts in copper smelting is relatively small, with April mainly focusing on maintenance. By-products such as sulphuric acid and gold can offset some of the losses incurred by smelters. On the consumption side, as downstream consumption gradually recovers, the operating rates of downstream copper processing enterprises have significantly increased. The shortage of secondary copper raw materials has also stimulated market consumption of copper cathode. However, the impact of US tariff policies is gradually becoming apparent, making it difficult to be optimistic about the subsequent consumption of copper. Overall, the fundamental support for copper is moderate, but US tariff policies still plague the market, which will limit the subsequent rebound height of copper prices. It is expected that SHFE copper prices in May may struggle to break new highs, and caution should be exercised against the risk of prices jumping initially and then pulling back. (Author's affiliation: Huawen Futures)

Impact of US Tariff Policies Gradually Emerges As downstream consumption gradually recovers, the operating rates of copper downstream processing enterprises have significantly increased. However, the impact of US tariff policies is gradually emerging, making it difficult to be optimistic about the subsequent copper consumption. Since April, the most-traded SHFE copper contract has formed a trend of first declining and then rising, with prices gradually rebounding after hitting a low of 71,000 yuan/mt. Meanwhile, arbitrage trading in the LME and COMEX copper markets has weakened, while domestic copper smelter maintenance has increased, and social inventory of copper has rapidly decreased, providing support for copper prices. How much room is there for copper prices to rebound subsequently? Supply Side Remains Tight In December 2024, China's copper concentrate production was 151,800 mt, up 6.89% YoY and 9.51% MoM. In March 2025, China imported 2.3939 million mt of copper concentrates and ore in physical terms, up 9.69% MoM and 2.73% YoY. This year, China's copper concentrate production has been at a relatively low level, while imports have remained relatively stable, resulting in a decrease in the overall supply of copper concentrates. In late April, Peru's Antamina mine fully suspended operations due to a sudden accident. In 2024, the mine's copper production was 426,900 mt, accounting for 1.86% of the global total copper mine production, which will have a certain impact on the global copper ore supply. In terms of inventory, as of April 18, the copper concentrate inventory at domestic mainstream ports was 706,900 mt, at a medium level. Meanwhile, the processing fee for imported ore continued to decline, falling to -$34.71/mt, hitting a record low. In addition, according to data from relevant institutions, the global new copper concentrate capacity additions accelerated from 2021 to 2025. However, in the three years after 2026, the growth rate of global new copper concentrate capacity will rapidly decline, potentially exacerbating the tight supply of global copper concentrates in the later period. As of February this year, China's copper scrap production was 115,800 mt in metal content, up 4.99% MoM and 60.83% YoY. According to March data, China's imports of copper scrap and shredded copper scrap were 189,700 mt in physical terms, down 3,631 mt (-1.88%) MoM and 13.07% YoY. Among them, imports from the US were 22,500 mt in physical terms, down 8,900 mt MoM. With the intensifying impact of Sino-US trade frictions, the volume of imported copper scrap may decline in the later period, leading to a tight supply-demand structure for copper scrap. In February, China's blister copper production was 911,500 mt, down 2.96% MoM and up 10.74% YoY. Among them, mineral-derived blister copper decreased by 26,500 mt from January to 738,700 mt, while scrap-derived blister copper decreased by 1,300 mt to 172,800 mt. In March, China imported 50,200 mt of copper anode, down 11.05% MoM and 47.8% YoY. In March, China's copper cathode production reached 1.1221 million mt, up 6.04% MoM and 12.27% YoY. Entering April, the supply of copper concentrates tightened, prompting some smelters to reduce their feedstock intake of copper concentrates. However, by increasing the intake of copper scrap and anode plates, they managed to maintain stable copper cathode production. Additionally, a new smelter in east China commenced operations, and the capacity utilization rate of smelters in southwest China increased, leading to a slight decline in the total copper cathode production. Due to significant losses in the industry, the operating rate of domestic smelters remained relatively low, while import losses also suppressed the supply of imported copper. Overall, despite the increase in copper cathode production, the overall supply pressure remained relatively small. Looking ahead at capacity increments, it is expected that China will add 1.17 million mt of new copper refining capacity in 2025, with overseas capacity additions reaching around 870,000 mt. Among these, the Kamoa mining area, jointly held by Ivanhoe and Zijin Mining, will contribute the largest increase in overseas capacity. Rebound in downstream operating rates In 2025, China's fiscal policy will become more proactive. Specifically, the scale of ultra-long special treasury bonds is expected to increase from 1 trillion yuan to 2 trillion yuan, while the scale of new special local government bonds is expected to rise from 3.9 trillion yuan to 4.5 trillion-5 trillion yuan. With the continuous strengthening of fiscal policy, it is anticipated that infrastructure investment in 2025 will continue to fluctuate at highs in recent years, with investment growth expected to stabilize at 5%-10%. Infrastructure investment will remain one of the main driving forces for industrial product demand in 2025. In December 2024, China's copper semis production reached 2.27 million mt, up 6.2% MoM and 16.53% YoY. The operating rate of China's copper semis industry in December 2024 was 69.02%. Affected by the Chinese New Year holiday, the operating rate of the copper semis industry was relatively low in January-February 2025 but gradually recovered to 67% in March. With the recovery of downstream consumption, the operating rates of downstream copper processing enterprises continued to rebound. Entering April, copper prices fell sharply, stimulating an increase in downstream orders. It is expected that the operating rate of the copper semis industry may continue to rise, but attention should be paid to the impact of US tariff policies on China's copper consumption. Additionally, the YoY data for overall power grid and NEV production both showed slight increases, providing further bullish support for copper cathode demand. Bulls take the initiative in forward contracts In April, the growth rate of COMEX copper inventories accelerated, approaching 130,000 short tons as of April 23. Domestically, as of April 24, China's social copper inventory stood at 181,700 mt, achieving eight consecutive weeks of weekly destocking. It fell by 195,300 mt from the year's high and was 223,000 mt lower than the 404,700 mt recorded in the same period last year. In April, the decline in LME copper inventories slowed, hovering around 210,000 mt, while the ratio of cancelled warrants dropped from a high of 50% to 37%. As of April 18, both non-commercial long and short positions of COMEX No. 1 copper decreased compared to the previous week, with net long positions dropping by 4,764 lots to 19,477 lots. Meanwhile, LME copper investment fund long and short positions both increased, with net long positions rising by 1,479 lots to 29,842 lots. The domestic futures market exhibited a contango structure, with long positions in far-month contracts dominating, indicating bullish sentiment among major funds regarding future prices. From the supply-demand balance table, as the peak consumption season approaches, downstream demand is rebounding while upstream supply is pulling back, leading to a gradual improvement in the supply-demand structure. The probability of a supply-demand gap in Q2 is increasing. Against this backdrop, market optimism is rising, providing some bullish support for prices. From a macro perspective, the US economic data for March, including ISM Manufacturing PMI, CPI, and PPI, showed steady performance. The impact of US tariff policies is expected to be reflected in April's data, and subsequent attention should be paid to the progress of negotiations between the US and other countries. On the supply side, the tight supply of copper raw materials has intensified, with import concentrate TC continuing to decline, and tariff policies affecting copper scrap imports. However, the current production cuts in copper smelting are relatively small, with April mainly focused on maintenance. By-products such as sulphuric acid and gold can partially offset smelter losses. On the consumption side, as downstream consumption gradually recovers, the operating rate of downstream processing enterprises has significantly increased. The shortage of secondary copper raw materials has also stimulated market consumption of copper cathode. However, the impact of US tariff policies is gradually becoming apparent, making it difficult to be optimistic about future copper consumption. Overall, the fundamentals of copper provide moderate support, but US tariff policies continue to trouble the market, limiting the rebound potential of copper prices. It is expected that SHFE copper prices may struggle to break new highs in May, with caution advised against the risk of jumping initially and then pulling back. (Source: Futures Daily)

During the domestic Qingming Festival holiday, overseas non-ferrous metals generally declined, led by copper prices. Yesterday marked the first trading day after the Qingming Festival, with the most-traded domestic futures contracts experiencing widespread declines, particularly in the non-ferrous metals sector, including copper, tin, and nickel. From the perspective of global capital markets, although the non-ferrous metals sector was affected by US tariff policies, price fluctuations were primarily driven by market sentiment. The author believes that the fundamentals of various non-ferrous metal varieties differ significantly, and after the release of sentiment, the market will return to fundamental logic. Copper: Since the US initiated the Section 232 investigation on copper, arbitrage trading on the LME and COMEX had driven global copper prices higher. With the news that the US might impose tariffs on copper earlier than expected, coupled with the unexpected implementation of "reciprocal tariffs," copper prices became the leading decliner in the sector. The current adjustment in copper prices mainly reflects market concerns, as the specific tariff policies have not yet been implemented, and the actual impact is limited. It is worth noting that the global supply of copper concentrates remains tight, and the recycling of copper scrap is still constrained. The pressure on raw materials has been transmitted to the smelting sector through processing fees. Data shows that the processing fees for imported copper concentrates have remained negative for several consecutive months. Although some domestic smelters have announced maintenance, sentiment-driven declines will further exacerbate industry pressure. Additionally, the continuous rise in copper prices after the Chinese New Year has suppressed downstream procurement demand. This price correction is expected to stimulate end-user restocking and drive a recovery in consumption. Overall, the short-term adjustment in copper prices is unlikely to persist, and the long-term tight supply-demand situation will support price recovery. Lead: Recently, lead prices have shown a pattern of initially jumping and then pulling back. From a fundamental perspective, high scrap battery prices and the high operating rate of lead-acid batteries continue to provide support on both the cost and demand sides, suggesting a potential for a short-term rebound in lead prices. Specifically, in terms of primary lead, with the commissioning of new overseas mines and seasonal resumption of domestic production, the supply of lead concentrates has gradually increased. However, due to the by-product revenue model, the growth in primary lead production is limited. For secondary lead, the supply of scrap batteries has entered the off-season, and rising prices have compressed smelting profits. However, imported crude lead may compensate for the raw material gap, and the actual production cuts may be less than expected. On the demand side, lead-acid batteries have entered the traditional off-season, with dealers being cautious in restocking and corporate orders showing a downward trend. Overall, lead prices may experience a technical rebound in the short term, but medium-term support may weaken, and the market is expected to fluctuate downward. Zinc: Similar to the lead market, the zinc market has a short-term need for a rebound after overcorrection. However, unlike lead, with the resumption of production at overseas mines such as Tara and Kipush, the supply of zinc concentrates in China has significantly improved since Q1, with rapid accumulation of port and smelter inventories. On the smelting side, the rebound in processing fees has improved corporate profits, and the easing of raw material supply has gradually been transmitted to zinc ingot supply. However, demand-side performance has fallen short of expectations, with downstream enterprise inventories at historically high levels and smelter finished product inventories continuing to accumulate, leading to a phase of market surplus. After a short-term rebound, zinc prices are expected to return to a fluctuating downward trend. Nickel: The main suppliers of nickel are Indonesia, the Philippines, and Russia, while the main importers include China, the US, and the EU. In the medium to long term, the nickel market maintains a supply surplus, and the negative impact of tariff policies on indirect demand has intensified market concerns. In detail, nickel ore prices remain firm, with rising premiums and discounts on Indonesian base prices, and the impact of the rainy season in the Philippines continues. Refined nickel remains in surplus, with low price spreads between domestic and overseas markets. Nickel iron demand is supported by the MoM increase in stainless steel production schedules, but industry supply pressure is increasing. Nickel sulphate has shown strength due to the cobalt export ban in the DRC, driving profit recovery for nickel salt smelters. Overall, under macro bearish pressure, nickel prices will maintain bottom fluctuations. (Source: Futures Daily)

On Wednesday night, LME copper closed at $9,907/mt, down 1.86%, while SHFE copper closed at 81,520 yuan/mt, down 1.08%. The most-traded contract saw a reduction of over 8,000 lots. The news that the US President might impose tariffs on copper earlier than expected pushed copper prices to a new high, though they pulled back slightly during the night. The wide price spread continued to drive active arbitrage trading, accelerating the concentration of copper resources in the US market. Additionally, two industry insiders revealed that Glencore declared force majeure on copper shipments from its Altonorte smelter in Chile, which has suspended production. Domestic copper supply faces concerns over reduced imports and resource outflows, coupled with worries about production cuts at smelters. The destocking during the peak season provides some fundamental support for copper prices, but attention is still needed on the potential weaker-than-expected demand during the peak season and the negative feedback from high prices, which could exert pressure on copper again. SHFE copper is expected to fluctuate upward, with continued focus on the implementation of US tariff policies, vigilance against overseas market squeeze risks, and attention to risk control.

On Tuesday, March 25, copper prices on the London Metal Exchange (LME) continued to rise to their highest level in nearly six months, as traders continued speculative buying based on expectations of US tariffs, and the US dollar weakened after the release of US data. At 17:00 London time (01:00 Beijing time on March 26), three-month copper futures rose by $156, or 1.57%, to $10,112 per mt, hitting a high of $10,130, the strongest since September 30, after a 1% increase on Monday. During the European afternoon trading session, the US dollar weakened due to tariff uncertainties and a fourth consecutive monthly decline in US consumer confidence in March, which fueled the rise in copper prices. A weaker US dollar makes dollar-denominated commodities cheaper for buyers using other currencies. Traders have been racing to push up copper prices, especially for New York copper futures, after the US ordered an investigation into the possibility of imposing tariffs on imported copper to rebuild US production. The most active May Comex copper futures climbed 2.2% to a record high of $5.21 per pound, pushing the Comex premium over LME to $1,372 per mt or nearly 14%. Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said, "This is still about arbitrage trading and the ability to move copper to the US to lock in thin profits. It seems that the premium is stabilizing in the middle range between zero and 25% tariffs." "This market is extremely difficult to trade now. This is not a surge in end-user demand. It is a technical transfer of inventory from one place to another." Hansen added that there have been concerns that importing copper into the US would lead to shortages in other regions, but technical indicators in the LME market do not show such concerns. The price spread between LME spot and three-month contracts remains at a discount of $10 per mt, rather than a premium, which would indicate a supply deficit.