This week's core impact stemmed from the nearly two-week full shutdown of the Grasberg copper mine in Indonesia following a mudslide accident on September 8. Freeport estimated that copper sales volumes in Q4 2025 would nearly stagnate, and 2026 production could be approximately 35% lower than previous forecasts, sparking market concerns about a significant contraction in global copper ore supply. Copper prices surged over 3% during the night session, hitting a new yearly high. On the macro front, the China Nonferrous Metals Industry Association emphasized opposition to "involutionary" competition in smelting, deepening supply worries. However, the US Q2 GDP was significantly revised up to 3.8%, and initial jobless claims also came in lower than expected, reinforcing expectations of US economic resilience. The US dollar index rose sharply, putting a cap on the rise in copper prices. Overall, supply-side disruptions and macro policy dynamics are intertwined, leading to significantly increased short-term copper price volatility, with both high-level risks and support present. This week, LME copper broke to a new high, touching the $10,500/mt level mid-week, while SHFE copper also rose to a yearly high, generally fluctuating around 83,000 yuan/mt. On the fundamentals side, spot trading for copper concentrates was inactive this week, with the spot TC holding around negative $40/mt. Arrivals of imported copper were flat compared to last week, and trading among traders was also sluggish. Downstream consumption was noticeably weak due to the surge in copper prices, resulting in a very subdued pre-holiday stockpiling atmosphere. The weekly operating rate of processing enterprises was poor, and spot premiums declined steadily. Looking ahead to next week, with only two trading days, macro front information is expected to be relatively quiet. Market trading will likely remain focused on mine production disruptions and macro policies. LME copper is forecast to fluctuate between $10,200/mt and $10,400/mt, while SHFE copper is expected to move between 81,500 yuan/mt and 83,000 yuan/mt. On the spot side, the sluggish atmosphere is expected to persist next week, with weak pre-holiday demand. Spot prices against the SHFE copper 2510 contract are anticipated to range from a discount of 80 yuan/mt to a premium of 120 yuan/mt.

On the 28th local time, OPEC+ held an online meeting. Early this morning, according to the latest news from Bloomberg, based on the statement released after the meeting, OPEC+ has agreed to use the 2025 oil production level as the benchmark for 2027. Meanwhile, OPEC+ will authorize the OPEC Secretariat to develop a mechanism to assess the maximum sustainable production capacity of participating countries, which will serve as a reference for the 2027 production benchmark. The next Joint Ministerial Monitoring Committee (JMMC) meeting of OPEC+ will be held on November 30th. OPEC+ will also hold another round of negotiations this Saturday, when it may decide whether to increase production in July. Representatives said that the eight OPEC+ member countries attending the meeting on Saturday may agree to increase daily production by 411,000 barrels in July, in line with the production increases in May and June. In addition, according to CCTV News, on the 28th local time, US President Trump stated that he had warned Israel to refrain from attacking Iran for the time being, so that the US government could have more time to promote a new nuclear agreement with Iran. Trump said he believed that Iran wanted to reach an agreement, which would "save many lives," and that the agreement could be reached "within the next few weeks." Trump also expressed his desire to bring inspectors to Iran. Overnight and into the early morning, international oil prices continued to rise. WTI crude oil futures rose by 2.5% to $62.41 per barrel, while Brent crude oil futures rose by 2% to $64.85 per barrel. At the close, WTI crude oil futures closed up 1.56% at $61.84 per barrel. Brent crude oil futures closed up 1.26% at $64.90 per barrel. US Fed releases minutes of May interest rate-setting meeting According to CCTV News, on May 28th local time, the US Fed released the minutes of the Federal Open Market Committee's meeting held from May 6th to 7th. The minutes showed that the Fed agreed to maintain the target range for the federal funds rate between 4.25% and 4.5%. Participants unanimously agreed that when considering the magnitude and timing of further adjustments to the target range for the federal funds rate, the Committee would carefully assess subsequent data, the changing economic outlook, and the balance of risks. The minutes stated that when assessing the appropriate stance of monetary policy, the Committee would continue to monitor the impact of future information on the economic outlook. Participants said that the assessment would take into account a wide range of information, including labour market conditions, inflationary pressures and inflation expectations, as well as financial and international developments. The Committee assessed that uncertainty regarding the economic outlook had further increased. Participants pointed out that if inflation persists while the outlook for economic growth and employment weakens, the Committee may face difficult trade-offs. The final magnitude of adjustments to government policies and their impact on the economy remain highly uncertain. Against this backdrop, all participants agreed that it was appropriate to maintain the target range for the federal funds rate at 4.25% to 4.5%. When considering the outlook for monetary policy, participants unanimously believed that, given the continued resilience of economic growth and the labour market, the Committee was well-positioned to wait for greater clarity on the outlook for inflation and economic activity. It was appropriate to adopt a cautious approach until the net economic effects of a series of government policy adjustments became clearer. Glencore makes significant purchases of Russian copper on the LME On Tuesday, Bloomberg reported market news that over the past three trading days, the London Metal Exchange (LME) Rotterdam warehouse had received delivery requests for approximately 15,000 mt of copper, leading to a significant decline in LME copper inventories. The report stated that Glencore, a global commodity giant, was the main trader behind these cargo pick-up applications and was planning to ship the copper to China. Notably, a substantial amount of Russian copper was involved in the transactions. It is understood that since the full-scale outbreak of the Russia-Ukraine conflict in 2022, escalating sanctions imposed by Europe and the US on Russia have led to a continuous accumulation of Russian copper inventories on the LME. In April 2024, the US and the UK announced new trading restrictions on Russian aluminum, copper, and nickel, including prohibiting the LME and the Chicago Mercantile Exchange (CME) from accepting newly produced Russian metals, while allowing eligible metal inventories. What are the implications? "After the US and the UK imposed sanctions on Russian copper in April 2024, Russian copper accounted for over 50% of the copper inventories in LME European warehouses, while China became one of the major export destinations for Russian copper following the sanctions," Zhang Weixin, a non-ferrous metals researcher at China Securities Futures, told reporters. After Russia and Ukraine resumed negotiations and proposed a ceasefire framework in May this year, Glencore may be betting on a relaxation of US and UK sanctions on Russia. Against the backdrop of warming spot demand in China, high premiums for imported copper, and the potential easing of US and UK sanctions on Russia, if Glencore resumes trading in Russian copper, it is expected to alleviate the "copper shortage" situation in the market. The reporter learned that in March this year, US copper prices surged to $11,633/mt, with a premium over LME copper reaching as high as $1,570/mt. Gu Fengda, chief analyst at Guosen Futures, stated that the high premium for US copper directly spurred a frenzy of "trans-oceanic arbitrage" and attracted a continuous influx of global spot copper into the US, further exacerbating the supply-demand mismatch across regions. Currently, the premium for US copper over LME copper stands at $683/mt, still significantly higher than the historical average for the same period. "With the favorable performance of copper fundamentals and the flow of some spot copper to the US, expectations of tight copper supply in markets outside the US continue to grow, which is also an important reason for Glencore's significant purchases of Russian copper this time."As spot liquidity tightens, LME copper's term structure may remain strong," said Xianfei Ji, a nonferrous metals researcher at Guotai Junan Futures. Data shows that since late April, LME copper inventories have continued to decline. This week, the destocking pace of LME copper inventories accelerated further, currently pulling back to 154,300 mt, hitting new periodic lows. Meanwhile, LME copper registered warrant quantities declined in tandem, now retreating to 83,125 mt. Cancelled warrants stood at 71,175 mt, with the ratio of cancelled warrants at 46.13%, remaining at elevated levels. Domestically, Weixin Zhang noted that due to the US "Section 232 investigation" on critical minerals, global commodity trading giants have diverted copper originally destined for Asia to the US, even relabeling Chilean Antofagasta copper ingots with US standards. This caused delays or cancellations of China's imported copper long-term contracts scheduled for April and May arrivals, driving up spot copper premiums in China and creating tight spot supply conditions. "Glencore's potential import activities could help alleviate China's copper supply tightness," said Yunfei Wang, head of the investment consulting department at ShanJin Futures. Currently, global copper cathode inventories are at median historical levels, while domestic copper inventories remain at historic lows. From price spread performance, the US copper premium over LME copper remains high, but with intensified price volatility, market divergence is gradually emerging. Policy-wise, after the US "reciprocal tariff" policy implementation was postponed, the market expected accelerated US copper scrap exports and increased raw material supply. However, domestic TC prices show no signs of raw material supply improvement yet. Inventory-wise, as of the week ending May 28, the US copper inventory buildup trend paused, while domestic social inventory also showed stabilization signs. Overall, Wang believes the US copper "arbitrage wave" may reverse at some point, creating downside potential for copper prices, though no reversal signals have appeared yet. Ji noted investors should closely monitor whether Trump will impose 25% additional tariffs on imported copper. If tariff hike expectations keep getting priced in, it may sustain high price spreads between US and LME copper, with South American and other regional supplies continuously diverted to the US, leaving other regions persistently undersupplied. "Short-term, under current spread structures, changed global copper trade flows seem only a matter of time," Wang stated. Medium and long-term, the copper market's focus remains on copper ore supply conditions and demand outlook.

Previously, the US implemented reciprocal tariffs, sparking market concerns that a potential disruption in trade chains could drag down economic growth and push up inflation. Risk assets were broadly sold off, and copper prices were not spared from the downturn. Subsequently, trade conflicts began to ease, and copper prices embarked on a path of recovery. However, it can be observed that SHFE copper faced significant resistance at the gap left by the sharp drop in early April, while support below was also strong, with futures prices fluctuating rangebound around the 78,000 yuan level. Why has SHFE copper been caught in a dilemma recently? Is there a possibility for futures prices to break out of the rangebound situation in the future? Uncertainty remains over the tariff grace period Recently, negotiations between the US and various countries have been underway. In particular, after the 90-day reciprocal tariffs between China and the US were reduced to 10%, the market briefly traded on the logic of easing tariff tensions. However, the progress of some negotiations has been slow. Recently, Trump's attitude shifted, and he again proposed imposing tariffs on the EU. The market is also concerned about the possibility of renewed trade frictions after the tariff grace period. The positive impact of the short-term tariff easing has largely been priced in, making it difficult to provide further support for market sentiment. In addition, to divert attention from domestic contradictions such as the massive scale of debt, it is difficult for the US to restore tariffs on other countries to pre-2024 levels, and concerns about the economic growth outlook cannot be easily allayed. Judging from the recently released US economic data, the impact of tariff disruptions has so far been limited. US inflation in April was lower than expected, and the monthly rate of retail sales rose by 0.1%, exceeding expectations. The Markit manufacturing and services PMIs for May also exceeded expectations. However, the issue of the US's high debt burden still persists, with a significant amount of US debt maturing in June. Recently, Trump's tax cut bill narrowly passed the House of Representatives, and the market continues to worry about the US's mounting debt. The impact of tariff increases on the economy also remains to be tracked. Mining-side processing fees remain at extremely low levels, and the supply side appears somewhat fragile Since last year, tight ore supply has been a major factor plaguing the copper market. However, except for the news in March this year that Tongling Nonferrous Metals Group would carry out production cuts and maintenance, the production of domestic smelters has largely not been constrained by tight ore supply and extremely low processing fees. Therefore, against the backdrop of steady to increasing production in the smelting sector, the issue of tight ore supply alone is unlikely to provide a substantial boost to copper prices. However, it cannot be overlooked that the current spot processing fees for domestic copper concentrates have fallen below -$40/dmt, and the annual and quarterly processing fees negotiated between domestic smelters and overseas miners are increasingly lower. Recently, the market has focused its attention on the mid-year negotiations between global copper mining giant Antofagasta and Chinese and Japanese smelters. Previously, sources revealed that due to tight copper concentrate supply, smelters may request a "zero-dollar" processing fee, or even a negative value, for the second half of 2025. If the rumors are true, the output of by-products such as sulphuric acid may not be sufficient to offset the losses, undoubtedly exacerbating the production pressure on domestic small and medium-sized smelters. Meanwhile, there have been more disruptions in overseas mining operations. Last Tuesday, Ivanhoe Mines announced that mining operations at its Kakula underground mine within the Kamoa-Kakula copper mining area in the Democratic Republic of Congo (DRC) had been temporarily suspended, primarily due to the impact of an earthquake. Its Phase I and II beneficiation plants continue to operate at low capacity using surface ore stockpiles, while operations at the Kamoa mine and Phase III beneficiation plant remain unaffected. Kamoa-Kakula is a world-class, large-scale, ultra-high-grade copper mine. The Phase I mine, with a capacity of 6 million mt/year, was constructed at Kakula, while Phase II utilizes existing facilities at the Kansoko mine to increase capacity to 12 million mt/year. In the evening of May 23, Zijin Mining, another major investor in the mine, also issued an announcement, stating that the earthquake is expected to adversely affect the achievement of the Kamoa-Kakula copper mine's annual planned production, with the specific extent of the impact requiring further assessment based on the investigation results. Overall, due to the faster expansion of global smelters, the copper ore supply tightness is relatively severe and is unlikely to ease significantly in the short term. Against the backdrop of strong bargaining power of miners, the copper concentrate TCs negotiated by smelters are becoming increasingly lower, with the possibility of approaching zero. In the early stage, smelters adjusted their operations through measures such as long-term contracts, supplementing with other raw materials, and offsetting profits with by-products such as sulphuric acid, maintaining overall stable production. Recently, during the concentrated maintenance period of the year, there are still few maintenance plans among domestic smelters, and there has been no significant production cut due to ore shortages. Going forward, attention should still be paid to the long-term contract levels of copper concentrate TCs negotiated between overseas miners and domestic smelters. Before the ore supply tightness can be transmitted to the smelting end, it will still be difficult to provide more upward momentum for copper prices. If smelters indeed undertake substantial production cuts, copper prices may experience a sharp increase. Social inventory of domestic copper cathode accumulates slightly, with expectations of weakening demand Recently, the performance of global copper visible inventories has been divergent. COMEX copper inventories have continued to rebound, rising from around 92,000 mt in early March to approximately 175,600 mt currently, reflecting the process of global copper flowing into the US amid expectations of a possible tariff hike on imported copper by the US. Correspondingly, LME copper inventories have been continuously pulling back, declining from around 260,000 mt in early March to approximately 164,700 mt currently, with a significant destocking amplitude. The current price spread between COMEX copper and LME copper remains at a relatively high level. Before the implementation of copper-related tariffs by the US, global copper will continue to flow into the US due to the existence of profits. Domestically, the traditional peak season of "Golden March, Silver April" has passed. Coupled with the rebound of copper prices from low levels, the downstream demand in the domestic copper market has weakened compared to the previous period, and the destocking of social inventories of copper cathode in China has halted. However, overall, the extent of inventory buildup has been very limited so far, and the inflow of domestic inventories has also been influenced by the outflow of exchange warrants and the inflow of inventories from bonded areas. From the downstream industry data released this month, the high-growth momentum of power grid investment continues, and the State Grid Corporation of China's annual record-high target is relatively certain. This aspect of demand will continue to support copper prices. According to data from the National Bureau of Statistics, automobile production continued to increase YoY, and industry prosperity persisted. However, in April, the production of refrigerators and air conditioners both pulled back, indicating a potential weakening in demand in this sector. Overall, during the moratorium period, global trade frictions have eased compared to the previous period, but uncertainties in negotiations still persist. Moreover, against the backdrop of deglobalization, market concerns about the economic outlook are difficult to completely dispel, and the suppression at the previous gap still exists. On the supply and demand side, concerns about tight ore supplies have lingered for a long time, and recent disruptions at the ore end have increased again, continuously consolidating the downward support for copper prices. Additionally, the siphon effect of the US has also made it difficult for copper inventories in other regions to accumulate significantly. However, the output of copper cathode remains stable, and there are expectations of a marginal weakening in demand. Therefore, a breakout from the current stalemate in SHFE copper prices may require more definitive changes to occur.

SMM Copper Morning Briefing: After the US announced last Friday that it would impose a 50% tariff on goods from the EU, copper prices fell. However, as the US dollar index dropped to its lowest point in more than three weeks, copper prices rebounded and continued to rise. Meanwhile, Zijin Mining announced on the evening of May 23 that multiple mine tremors had occurred in succession at the Kakula mine section of the Kamoa-Kakula copper mine owned by the company. Following a decision by the management of Kamoa Copper, underground operations in the area have been suspended. Concerns over copper ore supply also boosted copper prices. In addition, Trump has now reopened a 90-day window for trade negotiations with the EU.

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)