Premium: Improved trading sentiment and holder price support lift spot premiums
Early last week, trading sentiment in China's refined copper spot market was subdued as the half-year end was still in effect. Entering July, however, downstream buying interest picked up somewhat, and holders showed strong price-supporting sentiment, boosting China's refined copper spot premiums. Meanwhile, although imported copper continued to arrive during the week, domestic arrivals were varied, so China's refined copper retail inventory kept declining and provided further support to spot premiums. Overall, spot premiums for refined copper rose in most Chinese markets last week.
Looking ahead, as the futures delivery date approaches, holders are expected to maintain their price-supporting stance. However, as macro sentiment improves, copper prices may rise and dampen downstream consumption. Overall, China's refined copper spot premiums are unlikely to see significant declines, and most markets are expected to hold at a slight premium.
Data Source: Mysteel
Supply: Divergent domestic arrivals keep China's refined copper spot supply tight
Refined copper spot supply in China varied by markets last week. In Chongqing, smelter shipments were largely unchanged and some holders had spot inventory on hand, leaving regional supply adequate. In Guangdong, smelter shipments increased and spot circulation picked up. By contrast, in Shanghai, imported copper continued to arrive but was mainly non-standard and non-registered brands, while smelter shipments remained low. Meanwhile, smelter maintenance weighed more heavily on spot supply in Tianjin, and tight copper scrap availability further constrained refined copper production. Overall, the refined copper spot supply in China remained tight last week.
Looking ahead, spot arrivals in Shanghai and Chongqing are unlikely to improve significantly, and arrivals in Guangdong and Tianjin are expected to decline. As a result, China's refined copper spot supply is likely to remain relatively tight in the near term.
Demand: Divergent trading sentiment drags down transactions
Trading in China's refined copper spot market diverged last week. Early last week, the half-year-end settlement weighed on market consumption, while relatively tight invoice quota at month-end also kept transaction volumes subdued. On Tuesday (June 30), Mysteel's sample enterprise transaction volume fell below 20,000 tonnes, the lowest of the week. In the second half, downstream buying sentiment improved entering July and copper prices were relatively low, lifting spot trading activity. Overall, sluggish consumption in the first half and companies' reluctance to purchase copper at higher prices caused China's refined copper spot consumption to decline week on week.
Looking ahead, copper prices are expected to remain firm in the near term, likely to suppress spot market consumption.
Inventory: China's refined copper retail inventory falls while bonded inventory rises
China's refined copper retail inventory fell week on week last week. In Shanghai, downstream users showed decent restocking interest at lower prices, lifting outflows from local warehouses. Meanwhile, despite some imported copper arrivals, domestic supply remained limited, pushing Shanghai's inventory lower. In contrast, Guangdong's retail inventory rose week on week, driven by increased deliveries from smelters. Overall, with inventory in most markets declining on constrained inbound shipments, total refined copper spot inventory dropped week on week. Looking ahead, spot supply is expected to tighten further this week and consumption is likely to remain resilient, anticipated to keeping China's refined copper retail inventory decreasing.
China's refined copper bonded inventory edged up slightly last week. The import window opened intermittently, allowing some bonded refined copper to be cleared into the domestic market, while export-bound cargoes from domestic smelters also arrived in the bonded zones. As a result, the increase was marginal. Looking ahead, both customs clearance from bonded zones and shipments from domestic smelters into these zones are expected to continue in the near term, keeping fluctuations in China's refined copper bonded inventory limited.
The weekly average spread between the main COMEX and LME copper contracts was up by $71.79/tonne week on week to $361.15/tonne last week. The average LME cash-3M copper contract settlement spread was -$37.2/tonne last week, up by $13.5/tonne week on week. As COMEX copper traded still at a premium and above $200/tonne, COMEX copper inventory kept increasing last week and LME copper inventory fell further. Looking ahead, as the U.S. refined copper tariff policy remains uncertain, COMEX refined copper premiums are expected to persist in the near term, sustaining the trend of rising COMEX inventory and falling LME inventory. Additionally, the persistent contango between LME cash and three-month copper contracts is likely to continue dampening the willingness to deliver into LME warehouses.
Data Source: Mysteel
More regular analysis and comprehensive data on China's copper industry are available in Mysteel Copper Weekly, Mysteel Copper Monthly, and Mysteel Copper Database. Reach out to us via Mysteel's official website: Latest & Reliable Copper Market Price in China | Mysteel, and follow Mysteel Non-Ferrous for more insights!
Written by Zhaorui Cui, cuizhaorui@mysteel.com
Edited by Mingyuan Wang, wangmingyuan@mysteel.com
