The copper market is currently characterized by a "domestically strong, externally weak" and "futures strong, spot weak" pattern. On April 9th, the main SHFE copper contract (2605) edged up 0.56% to close at 97,810 yuan per tonne, showing some resilience. In contrast, the LME copper price declined 0.91% to $12,591 per tonne, reflecting more cautious sentiment in overseas markets. Domestic spot market activity was sluggish, with the Yangtze River spot 1# copper price falling by 180 yuan to 97,720 yuan per tonne. The spot premium stood at 180 yuan per tonne. Overall market transactions were thin; although the premium was adjusted higher, it lacked corresponding transaction volume, highlighting a stalemate between buyers and sellers at current price levels.
The core reason for the current range-bound copper prices is an intense tug-of-war between multiple forces at both the macroeconomic and fundamental levels.
On the macroeconomic front, geopolitical tensions and central bank policy dilemmas are creating volatility. The rapidly changing situation in the Middle East has led to sharp swings in risk premium. Market sentiment shifted from optimism to caution within 24 hours, as initial cheer over a provisional US-Iran ceasefire was quickly dampened by news of Israeli airstrikes on Hezbollah in Lebanon and Iran's renewed closure of the Strait of Hormuz. This high uncertainty, on one hand, pushes up global inflation expectations and industrial costs via rising oil prices (up over 2% on the day), and on the other hand, supports the US Dollar (with the DXY hovering strongly near 99.104) due to safe-haven flows, thereby pressuring dollar-denominated commodities like copper. Copper is caught between "inflationary cost support" and "dollar strength," making its direction unclear. Furthermore, rising oil prices reinforce the "sticky inflation" narrative, putting major central banks like the Fed in a difficult position between fighting inflation and preventing recession. Data from CME shows markets have almost entirely priced out Fed rate cuts in April and June. Expectations of a prolonged tightening cycle continue to weigh on global growth and metal demand prospects, forming a "ceiling" for copper prices.
Regarding fundamentals, a divergence exists between "strong current reality" and "weak future expectations."
Strong reality is evidenced by tightening supply and inventory drawdowns. Supply-side: Domestic refined copper supply has tightened noticeably due to low treatment charges and an inverted price spread between refined and scrap copper. Inventory-side: Copper inventories at the SHFE fell sharply by 16.16% in early April to 301,000 tonnes, a fresh low in over a month, confirming peak season consumption characteristics in China. Demand-side: Downstream operating rates remain high. Enamelled wire rod plants, having received a surge of orders following previous copper price drops, are operating at rates exceeding 80%, with order backlogs sustaining production until mid-to-late April. Operations at cable and copper tube plants remain firm to strong, supported by production schedules in power, new energy, and home appliances. This constitutes solid "real-world support" beneath copper prices.
Weak expectations stem from doubts about consumption sustainability and import pressure. Demand momentum: Despite sufficient current order backlogs, downstream consumers show low acceptance of high-priced raw materials, and the intake of new orders is already showing fatigue. Companies are primarily executing existing orders, with weak willingness to enter the market for new purchases, leading to thin spot transactions. This reflects market concerns about demand sustainability beyond the traditional March-April peak season. Import pressure: Increased inflows of imported copper during the week have slowed the pace of social inventory drawdowns, pressuring the domestic spot market. Underlying concerns: Slowing growth in automobile production and sales in the first two months, coupled with year-on-year declines in both production and sales of new energy vehicles in February, cast a shadow over the long-term demand narrative.
Looking ahead, copper prices are expected to remain range-bound in the short term, lacking sufficient momentum to break out of the current wide range. The upside is limited by strong macroeconomic headwinds, including Middle East uncertainty, elevated oil prices, a strong US Dollar, and a prolonged high-interest-rate environment, alongside weakening demand expectations as high prices begin to suppress actual consumption, with downstream "price aversion" preventing the spot market from validating futures gains. Conversely, the downside finds support from domestic low inventories and high operating rates, which provide resilience, and supportive government policies aimed at stabilizing growth and improving the business environment for SMEs, which underpin market confidence.
Given the mixed factors and lack of clear direction, investors should adopt a range-trading strategy, selling near the top and buying near the bottom of the range, while avoiding chasing rallies or selling into panics. Key variables to monitor closely include: the geopolitical situation, particularly navigation through the Strait of Hormuz and US-Iran negotiations; US inflation data, especially the crucial March CPI release; verification of domestic inventory trends and consumption strength in the coming weeks; and spot market trading activity, as persistent thin trading would struggle to support futures price increases.
In conclusion, the copper market is currently caught in a struggle between "macroeconomic anxiety" and "fundamental resilience." A clear unilateral trend is unlikely to emerge until either clear macroeconomic risks subside or domestic peak season demand is disproven. Range-bound trading, awaiting a breakout catalyst, is expected to be the dominant theme. Operationally, investors are advised to remain cautious, control position sizes, seek opportunities near key support and resistance levels, and implement strict stop-losses.
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