First Capital Futures: Macro disturbances, strong confidence in copper and aluminum markets

After the holiday, macroeconomic disturbances are evident. First, the U.S. Supreme Court ruled that tariffs are illegal, followed by the outbreak of geopolitical conflicts. Copper and aluminum prices are both testing higher levels, with copper approaching 105,000 yuan and aluminum returning to 24,000 yuan. Today, copper prices slightly declined then rebounded, while aluminum continues to test above 24,000 yuan. Market confidence in copper and aluminum remains strong. However, the fundamentals are not performing well. Although domestic production has resumed after the holiday, there are significant differences in industrial structure. Traditional industries are recovering slowly, while emerging industries have better orders. Some production has continued during the Spring Festival holiday. Overall, the market’s replenishment pace is slow, with both copper and aluminum showing significant inventory accumulation. As of February 26, domestic electrolytic copper spot inventory was 536,100 tons, and the latest data on March 2 shows domestic aluminum ingot inventory reaching 1,246,000 tons, both significantly higher than the same period last year. Once market sentiment declines, trading may revert to fundamentals, limiting upside potential for copper and aluminum. Short-term volatility may increase, and caution is advised when chasing high positions. (First Capital Futures)