2月25日特朗普签署行政命令启动232条款调查，指示调查铜进口和国外的铜生产是否对美国经济和国家安全构成风险。随后COMEX铜价相对全球其他基准价格明显走强，目前已接近2024年第二季度创下的历史高点，
这也导致伦敦金属交易所和上期所的期限价差趋紧，这可能会吸引投资者资金流入。Morgan Stanley believes that although the current supply fundamentals of Copper are solid, the rise in speculative positions and tightening term spreads may exacerbate market volatility. Additionally, any changes in tariff policies could lead to market reversals.
As LME Copper prices rise above the 0.01 million dollar mark, Morgan Stanley believes that structural tightening may continue, but any changes in tariff policy should be watched closely.
On March 19, Morgan Stanley published a Research Report stating that concerns about US tariffs may continue to drive Copper prices higher, with prices on COMEX and LME increasing by 26% and 13% respectively since the beginning of this year. Although the tariffs have not yet been implemented and the investigation period could last up to 270 days, the market has already reacted in advance.
On February 25, Trump signed an executive order to initiate a Section 232 investigation, directing an investigation into whether Copper imports and foreign Copper production pose risks to the USA's economy and National Security. Following this, COMEX Copper prices significantly strengthened against other global benchmark prices, approaching the historical high set in the second quarter of 2024, while the increase in COMEX Copper prices has clearly outpaced the rise in LME prices.
However, Morgan Stanley warns that although the fundamentals still provide support, including declining inventories, tightening term structures, and constrained mine supplies, any changes to tariff policy could lead to a market reversal.
The supply and demand fundamentals remain solid.
Morgan Stanley believes that tightening on the supply side may continue.
From the beginning of the year until now, Global copper mine production has been reduced by about 0.25 million tons, while Chile's January copper production decreased by 25% month-on-month, far exceeding the seasonal average decline of 13%. This is reflected in the continuous decline in refining processing fees, highlighting the tightening of the copper concentrate market. Smelters have also reacted, with reports indicating that Tongling Nonferrous Metals Group is cutting refined copper production, while global smelting activity has declined for the first time since October 2024.
In addition, speculative positions continue to increase, especially in the London market. Expectations of USA tariffs have led to an increase of 0.1 million tons in the cancellation of warehouse receipts (delivery instructions) in Asian warehouses at the London Metal Exchange, and spot inventory has fallen back to mid-2024 levels.
Where are the risks for rising copper prices?
Morgan Stanley believes that while copper prices may continue to rise in the short term, investors must closely monitor the progress of USA tariff policies. The demand for copper in the USA is closely related to tariff expectations, so any changes may lead to a market reversal, especially since the USA may stockpile a large amount of materials they do not need.
In addition, Morgan Stanley pointed out that current copper stocks are generally lagging behind the rise in copper prices, which may indicate market concerns about future demand due to the uncertainty brought about by tariffs. It is worth noting that current positions are rising, especially at the London Metal Exchange.
Morgan Stanley stated that, although the current growth rate is not as extreme as in the second quarter of 2024, it still poses potential risks.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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