Copper prices weakened and declined in March

1、 Trend analysis

According to monitoring data from Shengyi Society, copper prices fluctuated and fell mainly in March. At the beginning of the month, the copper price was 102136.67 yuan/ton. At the end of the month, the copper price fell to 95520 yuan/ton, with an overall decrease of 6.48% and a year-on-year increase of 17.15%.
According to the Business Society’s current chart, copper spot prices were higher than futures prices in March, with the main contract being the expected price two months later. It is expected that copper prices will be better in the future.
According to LME inventory, LME copper inventory increased significantly in March. As of the end of the month, LME copper inventory was 359825 tons, up 39.64% from the beginning of the month.
Macroscopically, geopolitical risks such as the US Iran conflict continue to ferment, and the market is concerned that potential disruptions in the Strait of Hormuz will impact global crude oil supply. High oil prices not only drive up smelting costs (such as sulfuric acid), but also suppress manufacturing demand, exacerbating expectations of a global economic slowdown, thereby suppressing copper consumption prospects.
Supply side: As of late March, the spot processing fee (TC) for imported copper concentrate in China has fallen to a deep negative range of over -60 US dollars per ton. Unlike in the past when there was a shortage of cold materials such as scrap copper and crude copper, which could provide a buffer, the cold material market has also tightened significantly this month. Due to the shortage of raw materials and severe losses in processing fees, coupled with the centralized maintenance period of domestic smelters in April and May, the market generally expects a more than expected decline in refined copper production.
Downstream: After a significant drop in copper prices, downstream purchasing intentions have been significantly released. The operating rate of electrolytic copper rods has rebounded to 72.9%, basically returning to the same period last year. Copper rod enterprises have a strong willingness to replenish inventory at low prices, resulting in a decrease in finished product inventory. The construction of AI data centers, global power grid upgrades (especially the renovation of old power grids in Europe and America), and energy transformation (wind power, photovoltaics, and electric vehicles) are regarded as the “three major engines” for future copper consumption. Especially the huge consumption of electricity by AI computing power centers is seen as a new variable driving copper demand.
According to the annual price comparison chart of Shengyi Society, in the past five years, copper has risen more than fallen in April.
In summary, the copper market in March is undergoing a deep adjustment driven by macro factors. Although geopolitical conflicts and the Federal Reserve’s policy shift have brought significant short-term selling pressure, the supply and demand relationship at the industrial level has not actually deteriorated. It is expected that copper prices may continue to fluctuate weakly in the short term, but the downward space is expected to be limited.