The copper market weakened this week (3.2-3.6)

I. Trend Analysis

Business Society monitoring data shows that copper prices declined slightly this week, reaching 101,121.67 yuan/ton by the 6th, down 1.04% from the start of the week and up 29.11% year-on-year.
According to the weekly price trend chart from Business Society, copper prices have experienced seven declines and four increases over the past three months, with a slight decrease this week.
LME copper inventory
According to data released by the London Metal Exchange (LME), LME copper inventory rose slightly, reaching 282,200 tons by the end of the week, up 9.52% from the beginning of the week.
Macro perspective: The Middle East geopolitical conflict has entered its sixth day, with escalated actions by the U.S. and Israel triggering a surge in crude oil prices. Global markets swiftly shifted to a “risk-off + stagflation” mode. Both the U.S. dollar index and Treasury yields soared, exerting valuation pressure on commodities.
Supply side: The copper market has faced significant supply pressure recently. LME copper inventories have shown a fluctuating rebound trend, with the latest stockpiles rising above 260,000 tons. Domestically, both domestic production and previously locked-in imported copper shipments continue to arrive, coupled with elevated social inventories, resulting in overall ample market liquidity. Although logistical disruptions in the Democratic Republic of Congo have impacted supply to some extent, high copper prices have stimulated increased scrap copper recycling and boosted imports, effectively alleviating raw material bottlenecks. Despite a slight month-on-month decline in refined copper production, year-on-year growth remains robust. This has led to relatively loose supply in the copper market, exerting downward pressure on prices.
On the demand side, the performance of downstream enterprises has been less than satisfactory. Although downstream enterprises have continued to resume production and work, coupled with recent declines in Shanghai copper futures prices, downstream procurement willingness has increased, and order activity has risen. However, overall demand remains relatively weak. Power investment remains stable, while automotive production and sales are growing. However, home appliance production schedules are declining, and the real estate sector continues to be sluggish. The incremental demand from AI data centers is still insufficient to offset the gap in traditional industries. The slow resumption of downstream production has led to a continuous influx of domestic supplies, resulting in accumulated social inventories and hindered destocking. The spot market exhibits characteristics of “having prices but no market.” While suppliers are strong in maintaining prices and have stabilized premiums, downstream buyers remain highly reluctant to pay high prices, resulting in minimal transactions for high-priced goods.
In summary: In the short term, copper prices will face dual pressures from geopolitical risks and inventory concerns. Meanwhile, the domestic reality of “high inventory and weak demand” also limits upward momentum. From a medium-term perspective, copper prices still have some support. Overseas mine supply growth remains sluggish, refined copper production capacity expansion is extremely limited, global visible inventory is rising but U.S. copper accounts for a high proportion, and the tight balance of fundamentals persists. Copper prices are expected to continue fluctuating broadly in the short term.