Report Industry Investment Rating - Not provided in the report Core Viewpoints - Copper prices are likely to fluctuate at a high level. Arbitrage opportunities are limited, and it is recommended to take a wait - and - see approach for option contracts [3][32] Summary by Directory 1. Market Review - Last week, the price of the main contract CU2604 of Shanghai copper futures showed a fluctuating trend, ranging from around 100,030 yuan/ton to a maximum of about 104,540 yuan/ton [7] 2. Macroeconomic Aspect - In February, the Manufacturing Purchasing Managers' Index (PMI) was 49.0%, a decrease of 0.3 percentage points from the previous month, indicating a decline in the manufacturing prosperity level. Among the five sub - indices of the manufacturing PMI, the production index, new order index, raw material inventory index, employment index, and supplier delivery time index were all below the critical point [10][11] 3. Supply and Demand Situation - As of March 5, 2026, the Chinese copper smelter's rough smelting fee was - 56.1 US dollars per thousand tons, and the refining fee was - 5.7 cents per pound. As of March 6, 2026, the refined copper price in Shanghai Wumaomao was 101,120 yuan/ton, the scrap copper price in Foshan, Guangdong was 89,250 yuan/ton, and the refined - scrap price difference was 2,945 yuan/ton, which was at a relatively high level compared to the past five years [15][17] 4. Inventory Situation - As of March 6, 2026, the cathode copper inventory on the Shanghai Futures Exchange was 425,145 tons, an increase of 33,616 tons from the previous week. As of March 4, 2026, the LME copper inventory was 261,525 tons, an increase of 3,850 tons from the previous trading day, and the proportion of cancelled warrants was 5.61%. As of March 5, 2026, the inventory in Shanghai Free Trade Zone was 85,400 tons, the inventory in Guangdong was 97,000 tons, and the inventory in Wuxi was 119,300 tons. The inventory in Shanghai Free Trade Zone decreased by 5,700 tons from the previous week [21] 5. Macroeconomic and Fundamental Analysis - In February, the manufacturing PMI decreased, the new order index declined, the copper smelter's processing fee continued to drop rapidly and was at an extremely low level, the refined - scrap copper price difference decreased rapidly but remained at a high level, the investment in power grid infrastructure changed from increase to decrease, the copper product output decreased slightly year - on - year, the Shanghai copper inventory increased significantly and was at a relatively high level in recent years, and the LME copper inventory increased rapidly and was at the highest level in recent years [31] 6. Future Outlook - Copper prices are likely to fluctuate at a high level. Arbitrage opportunities are limited, and it is recommended to take a wait - and - see approach for option contracts [3][32]

Group 1: Report Investment Rating - No specific investment rating for the industry is provided in the report. Group 2: Core Views - Copper prices are likely to be in a volatile market, with limited arbitrage opportunities. It is recommended to mainly observe option contracts [4][38][39] Group 3: Summary by Directory 1. Market Review - In October, the price of the main contract of Shanghai copper futures showed an upward trend with increased price fluctuations, ranging from 82,300 yuan/ton to 89,270 yuan/ton. The price trend of the LME copper futures contract was similar to that of the main contract of Shanghai copper futures, operating in the range of 10,253 - 11,200 US dollars/ton [7] 2. Macroeconomic Environment - On October 29th local time, the Fed announced a 25 - basis - point cut in the federal funds rate target range to between 3.75% and 4.00%. It also announced the end of balance - sheet reduction starting December 1st. According to CME "FedWatch" data, the probability of a 25 - basis - point rate cut by the Fed in December is 74.7%, and the probability of keeping the rate unchanged is 25.3%. By January next year, the probability of a cumulative 25 - basis - point rate cut is 57.7%, the probability of keeping the rate unchanged is 16.6%, and the probability of a cumulative 50 - basis - point rate cut is 25.6% [2][11][37] 3. Supply Side - **Refined Copper Production**: As of September 2025, the monthly refined copper production was 1.266 million tons, a decrease of 35,000 tons from the previous month but a 10.1% year - on - year increase. As of October 30, 2025, the refining fee for Chinese copper smelters was - 4.45 cents/pound, and the rough smelting fee was - 42.7 US dollars/kiloton [15] - **Scrap Copper Spread**: As of October 31, 2025, the price of refined copper in Shanghai Wumaom was 87,565 yuan/ton, the price of scrap copper in Foshan, Guangdong was 78,800 yuan/ton, and the refined - scrap spread was 885 yuan/ton [21] 4. Demand Side - As of September 2025, the monthly copper product output was 2.232 million tons, a 5.9% year - on - year increase. The cumulative monthly investment in power grid construction was 437.8 billion yuan, with a 9.9% year - on - year growth rate [23] 5. Inventory Side - As of October 31, 2025, the cathode copper inventory in the Shanghai Futures Exchange was 116,140 tons, an increase of 11,348 tons from the previous week. As of October 29, 2025, the LME copper inventory was 135,350 tons, a slight increase of 775 tons from the previous trading day, with a cancelled warrant ratio of 10.51%. As of October 30, 2025, the COMEX copper inventory was 348,662 tons, an increase of 2,000 tons from the previous trading day. The inventory in Shanghai Free Trade Zone was 106,600 tons, with a decrease of 4,300 tons from the previous week, and the inventories in Guangdong and Wuxi were 19,200 tons and 40,300 tons respectively [29] 6. Outlook - **Price Trend Factor Analysis**: Key factors affecting copper prices include Chinese economic policies (PMI has declined), US policies (uncertainty in the Fed's December rate cut), supply (refined copper processing fees at the bottom, high copper production), demand (slowing power grid investment growth, increasing copper product output), and inventory (significant cumulative inventory of COMEX copper) [36] - **Market Outlook**: Considering various factors such as the Fed's policy, copper supply, demand, and inventory, copper prices are likely to be in a volatile market, with limited arbitrage opportunities. It is recommended to mainly observe option contracts [37][38][39]