Copper price volatility to grow amid geopolitical conflicts and mixed fundamentals

China's 1# refined copper spot price stood at Yuan 101,393/tonne on March 4, falling by Yuan 388/tonne day on day, according to Mysteel's assessment. Specifically, spot prices in Shanghai ranged between Yuan 100,880-101,980/tonne, averaging at Yuan 101,370/tonne. The 1# refined copper average spot premium in Shanghai was Yuan -160/tonne, rising by Yuan 30/tonne compared with the previous trading day.

Recent geopolitical conflicts have fueled concerns over economic growth expectations and the outlook for copper demand, leading copper prices to trend downward amid volatility. In China, as downstream consumption continued to recover, demand for refined copper steadily picked up, and spot premiums also showed an upward trend. Mysteel's survey covering 56 refined copper trading enterprises (including traders, smelters, and downstream fabricators) in China indicated that the daily spot transaction volume totaled 32,600 tonnes on March 4, rising by 700 tonnes or 2.22% compared with the previous trading day. Looking ahead, rising demand is expected to continue supporting spot premiums and trading activity in China's refined copper market.

Regarding inventory, China's refined copper social inventory stood at 573,000 tonnes on March 2, rising by 65,900 tonnes week on week, staying at a record high level. Overseas, LME copper inventory increased by 7,925 tonnes week on week to 261,525 tonnes on March 2, marking a second consecutive weekly increase. Overall, high global refined copper inventory suppressed copper prices.

China's downstream copper semis market saw a gradual recovery. The copper plate/strip market continued to be primarily supported by demand for red copper plate/strip, while trading activity in the copper bar market also increased. The copper tube market, however, faced trading pressure due to copper price volatility. Transactions in the copper rod market declined on March 4 from earlier in the week, mainly because refined copper rod producers prioritized delivery of existing orders and controlled new orders. Production in the secondary copper rod market remained sluggish, although finished product prices held firm. Combined with falling copper prices, the refined-secondary copper rod price spread narrowed notably by Yuan 530/tonne day on day, reaching Yuan 360/tonne on March 4, further impacting shipments for copper rods. Mysteel's 31 Chinese copper rod sample manufacturers with a total annual capacity of 6.01 million tonnes and 6 sample traders reported that order volumes decreased by 7,300 tonnes or 33.28% day on day, reaching 14,600 tonnes on March 4, with refined copper rod transactions falling by 6,800 tonnes or 33.95% to 13,200 tonnes, and secondary dropping by 500 tonnes or 26.23% to 1,400 tonnes. 

Ongoing geopolitical conflicts have exacerbated market uncertainties, with the fundamentals exerting a mixed impact on copper prices amid high global inventory and improving demand. Going forward, copper price volatility is likely to intensify, with prices expected to fluctuate at elevated levels in the short term. Attention should be paid to the recovery pace of downstream consumption in China and developments in the international situation.

For more in-depth insights, long-term outlook, and comprehensive data on China's copper market, subscribe to Mysteel Copper Weekly, Mysteel Copper Monthly, and Mysteel Copper Database.

Written by Mingyuan Wang, wangmingyuan@mysteel.com 

Edited by Ruolan Chen, chenruolan@mysteel.com