Copper prices in China have retreated in March, pressured by rising inventories and a firmer US dollar.
The most-traded Shanghai Futures Exchange (SHFE) April contract fell from 103,920 yuan/t ($15,104/t) on 27 February to a three-month low of Yn95,400/t on 18 March. London Metal Exchange (LME) three-month copper fell from a close of $13,296/t to $12,340.50/t over the same period.
Combined LME and SHFE copper inventories increased to 745,283t on 13 March, up by 56pc from a month earlier. The build reflects higher refined output in China and a slower-than-expected recovery in demand following the 15-23 February lunar new year holiday.
Industry estimates indicate China's refined copper output rose by 8-13pc on the year in January-February. Tight concentrate availability has not yet curtailed refined production, with smelters maintaining operations by accepting lower concentrate treatment and refining charges (TC/RCs). The Argus weekly TC index fell to -$60.20/t and -6.02¢/lb on 13 March, from -$44.60/t and -4.46¢/lb on 31 December.
China imported 4.934mn t of copper concentrate in this year's first two months, up by 5pc on the year, customs data show.
Market participants expect China's refined copper output to rise further in March, with Liangshan Copper planning to begin trial operations at its new 125,000 t/yr refinery this month.
But demand growth in the new energy vehicle (NEV) sector — a major driver of Chinese copper consumption in recent years — has moderated following cuts to purchase incentives. China's NEV output and sales fell by 8.8pc and 6.9pc to 1.735mn and 1.71mn units in January-February, according to data from the China Association of Automobile Manufacturers.
Argus forecasts copper demand from China's new-energy sectors to grow by about 2pc to more than 3.3mn t in 2026, far below the estimated 27pc increase in 2025.
Downstream restocking interest remains limited, with domestic spot premiums assessed by Argus trading at discounts to SHFE since mid-January. China's imports of unwrought copper and semi-finished products fell by 16pc on the year to 700,000t in January-February, reflecting weaker import appetite during those months as arbitrage remained closed.
Stronger dollar
A strengthening US dollar has added further pressure to copper prices. The dollar index rose to a four-month high of 100.54 on 13 March, from 98.826 on 10 March. Market participants expressed concerns that sharply higher oil prices driven by the Middle East war could delay US monetary easing. The Ice front-month May Brent contract increased from $91.40/bl on 10 March to $109.65/bl on 18 March because of ongoing geopolitical tensions in the Middle East region.
The US Federal Reserve kept their target interest rate unchanged on 18 March, citing uncertainty stemming from "developments in the Middle East" following the Iran conflict. It continued to pencil in one quarter-point rate cut this year, unchanged from the previous projection in December. Policymakers still see one more quarter-point cut in 2027.
But the copper market may remain bullish in the medium term from an international perspective. The war in the Middle East still carries supply-side risks that could tighten conditions later if they intensify, particularly in the African copper belt.
