Copper futures saw gains on February 25th. The main Shanghai copper contract opened at 101,650 yuan per ton and closed at 102,460 yuan per ton, up 0.94% from the previous trading day's close. During the evening session, the contract opened at 102,880 yuan and closed at 103,040 yuan, an increase of 0.58% from the afternoon session's close.
In the spot market, as the SHFE copper 2603 contract entered its first day of rolling, spot quotations adjusted significantly. Supply and demand both showed signs of recovery. Previously secured imported copper continued to arrive at ports, and undelivered warehouse warrants were gradually released, keeping circulating supply at high levels. Downstream enterprises resumed work gradually after the holiday, leading to increased market inquiries and purchasing, with buying sentiment noticeably improving. However, the direct release of supply increments, particularly the outflow of undelivered warrants, put pressure on spot premiums/discounts. Nevertheless, under a contango structure, holders' willingness to deliver to forward months diverted some spot supply, providing some support to the discounts. The market is in the early stages of post-holiday rebalancing, and spot discounts are expected to remain under pressure.
Geopolitically, the U.S. Department of Commerce announced it would impose countervailing duties on crystalline silicon solar cell modules imported from India, Indonesia, and Laos, citing government subsidies that undermine the competitiveness of U.S. products. Preliminary rulings set general subsidy rates at 125.87% for Indian producers/exporters, 104.38% for Indonesia, and 80.67% for Laos. U.S. tariff risks continue to evolve. Regarding U.S.-China relations, the U.S. Trade Representative stated that the Section 301 investigation into China's implementation of the Phase One trade agreement will continue, potentially leading to tariff measures. In response, a spokesperson expressed hope that the U.S. would view the agreement's implementation objectively and rationally, avoid shifting blame, and refrain from creating disputes. China is willing to work with the U.S. under the guidance of leaders' important consensus, utilize consultation mechanisms, focus on implementing existing agreements, and identify mutual interests. If the U.S. insists on the investigation and imposes restrictive measures, China will take all necessary actions to defend its legitimate rights and interests.
In mining news, as Chile prepares for a new right-wing government, the world's largest copper producer is entering a new political phase, with mining policies under review. President-elect José Antonio Kast, who takes office on March 11th, campaigned on strict border control and tough security policies, and has signaled adjustments to mining policy. Kast has merged the Mining Ministry with the Economy Ministry into a single department, appointing agronomist Daniel Mas, who lacks a mining background, to lead it. The head of Chile's mining council criticized the move, suggesting it treats mining as a second-tier industry. An analyst noted that while the merger might improve coordination, it could weaken specialized mining expertise. The market expects Chile's mining sector to attract approximately $105 billion in investments by 2034, but Kast's goal of increasing copper production by 20% within two years is seen as unrealistic. Analysts emphasize that policy credibility and execution capability are key to Chile's mining competitiveness, requiring a balance between specialization and integration.
Regarding smelting and imports, the International Copper Study Group's latest monthly report indicated a global refined copper market surplus of 380,000 tonnes in 2025, compared to a surplus of 69,000 tonnes in 2024. In December, the surplus was 173,000 tonnes, up from 74,000 tonnes in November. Specifically, global mine production in December was 2.05 million tonnes, with full-year 2025 production reaching 23.125 million tonnes, up from 22.958 million tonnes the previous year. Global refined copper production in December was 2.431 million tonnes, with annual production at 28.54 million tonnes, compared to 27.397 million tonnes a year earlier. Global refined copper consumption in December was 2.258 million tonnes, with annual consumption at 28.16 million tonnes, versus 27.328 million tonnes previously.
On the consumption front, European companies accounting for over 90% of the region's copper scrap consumption issued a joint statement warning of critical supply shortages if the EU does not implement export restrictions on copper scrap, similar to those for aluminum. Since 2022, EU copper scrap exports have surged by 31%, with about half going to China. Concurrently, high U.S. premiums, driven by tariff expectations, have attracted significant European refined copper to the U.S., exacerbating supply tightness in the local European market. An executive from German metal producer Wieland stated that Europe faces high risks of cathode copper shortages next year, with a dual shortage of scrap and cathode copper creating a dangerous situation for manufacturers of semi-finished products like copper rods, wires, and tubes. The European Commission previously announced plans to restrict aluminum scrap exports to prevent outflows. The executive argued that similar restrictions for copper are logical. Signatories to the statement include core European copper firms such as Aurubis, ElvalHalcor, and La Farga.
In inventory and warrant data, LME warrants increased by 1,350 tonnes to 249,650 tonnes. SHFE warrants rose by 10,717 tonnes to 287,806 tonnes. Domestic Chinese electrolytic copper spot inventory stood at 508,500 tonnes on February 25th, up 154,900 tonnes from the previous week.
Strategy for copper is neutral. The market experienced weak supply and demand around the Spring Festival. Mining treatment charges have stopped falling and begun to rise, with second-quarter maintenance expectations supporting raw material prices. In smelting, crude copper processing fees are rising, import arbitrage windows are closed, and bonded inventory is flowing into the domestic market. End-consumption entered a full holiday mode, with operating rates for refined copper rod, cable, and enameled wire sectors declining significantly, creating a spot market with price but little activity. Inventories at the three major global exchanges continued to accumulate, highlighting stock-building pressure during the holiday. Copper prices faced downward pressure, but this situation is expected to gradually change after the holiday. Strategically, it is advised to monitor the pace of post-holiday work resumption and inventory drawdown after the festival. In the short term, a range-trading approach is recommended, with the Shanghai copper operating range suggested between 98,000 and 104,500 yuan per ton. For the spot market, large-scale inventory building should be postponed until discounts narrow.
For options, the strategy is to sell puts. Risks include a significant post-holiday recovery in domestic demand falling short of expectations, continued inventory accumulation, and liquidity crunch risks.
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