China's 1# refined copper spot price stood at Yuan 95,531/tonne on March 26, dropping by Yuan 318/tonne compared with the previous trading day, according to Mysteel's assessment. Specifically, spot prices in Shanghai ranged between Yuan 95,210-95,720/tonne, averaging at Yuan 95,440/tonne. The 1# refined copper average spot premium in Shanghai was Yuan -110/tonne, falling by Yuan 15/tonne day on day. This week, copper prices experienced frequent fluctuations due to concerns over geopolitical tensions and economic outlooks. Although prices retreated from previous highs, this volatility fostered a strong wait-and-see sentiment in the market.
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 28,200 tonnes on March 26, dropping by 2,400 tonnes or 7.85% day on day. Although downstream enterprises actively purchased at low prices, they remained relatively cautious overall. Meanwhile, the market showed strong demand for refined copper cargoes eligible for current-month invoicing, but some traders had limited availability of such goods, leading to a decline in transactions.
Regarding inventory, China's refined copper retail inventory stood at 440,800 tonnes on March 27, falling by 99,700 tonnes week on week, indicating continuous declines after mid-March. Copper prices fluctuated downwards this week, resulting in relatively active downstream procurement. Meanwhile, holders actively sold warrants, leading to significant warehouse outflows. Though some imported copper flowed into China, the growth was constrained, combined with limited shipments from smelters, leading to continued inventory declines. Looking ahead, the second quarter marks a peak period for domestic smelter maintenance, likely to prompt smelters to continue restricting shipments to warehouses. Additionally, downstream demand has room for further growth. However, imported copper arrivals are projected to increase in early April, which may offset some of the inventory decline. Therefore, refined copper retail inventory in China is expected to decrease modestly next week.
China's copper semis markets saw generally improving demand amid relatively weak copper prices this week. 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 357 tonnes or 4.34% day on day, reaching 7,861 tonnes on March 26, with refined copper rod transactions growing by 957 tonnes or 17.22% to 6,515 tonnes, but secondary decreasing by 1,314 tonnes or 49.40% to 1,346 tonnes. Orders in the refined copper rod, copper plate/strip, and copper bar markets were relatively favorable, with demand maintaining steady growth. However, as the month-end approaches, spot orders for copper tubes declined, and copper tube enterprises primarily focused on fulfilling long-term contract shipments. The secondary copper rod market, however, remained constrained by the narrow refined-secondary copper rod price spread and raw material issues, resulting in persistently low market activity.
Going forward, close attention should be paid to the impact of geopolitical conflicts in the Middle East on the macroeconomic environment and market sentiment. With recent declines in copper prices, China's refined copper inventory keeps falling, coupled with persistent challenges in the copper scrap market, which continue to benefit refined copper consumption, providing fundamental downside support for copper prices. Copper prices are expected to fluctuate downwards in the short run, with prospects for a stronger performance in the longer term.
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Written by Mingyuan Wang, wangmingyuan@mysteel.com
Edited by Ruolan Chen, chenruolan@mysteel.com
