Premium: Spot premiums rise on limited supply improvement and resilient demand
China's refined copper prices shifted higher last week, and the weekly average spot premium also rose. On the supply side, arrivals improved only marginally, despite some supplements from imported copper, and overall spot supply remained tight. On the demand side, downstream purchasing interest was decent when prices were low during the week, but price surges at times temporarily slowed spot transactions. Overall trading volumes edged up slightly week on week. With limited supply improvement and resilient trading, China's refined copper retail inventory continued to decline from the previous week. Consequently, copper prices and spot premiums drew some fundamental support and moved higher.
Looking ahead, as the month-end nears, downstream consumption is unlikely to see a significant pickup, while expectations of increased imported copper inflows persist, putting some downward pressure on spot premiums. However, given that arrivals of domestic material may remain thin, spot premiums are expected to stay range-bound this week. According to Mysteel, refined copper spot premium ranges are forecast with Guangdong at Yuan 50/tonne to Yuan 180/tonne, Tianjin at Yuan 50/tonne to Yuan 200/tonne, and Chongqing at -Yuan 50/tonne to Yuan 350/tonne this week.
Data Source: Mysteel
Supply: China's refined copper spot supply sees limited improvement
China's refined copper spot supply saw limited improvement last week. Although imported copper inflows into Shanghai increased as import profit improved, smelter shipments remained tight, leaving overall spot supply in the region still constrained. In Guangdong, smelter deliveries were also low, and as the supply shortage in Shanghai widened the Shanghai-Guangdong refined copper price spread, some Guangdong cargoes were shipped to East China, further restricting local spot circulation. In Tianjin, smelter shipments were quite limited, affected by raw material shortages and maintenance. In Chongqing, spot liquidity was likewise dampened by low smelter deliveries. Overall, China's refined copper spot supply remained tight last week. Looking ahead, smelter shipments are unlikely to improve markedly in the short term, but imported copper inflows are expected to continue increasing. As a result, China's refined copper spot supply is likely to improve further, though overall it is expected to remain tight.
Demand: Rising copper prices dampen spot trade volumes
China's refined copper spot trading was mixed last week. On Tuesday and Wednesday, when copper prices were elevated and spot premiums stood high, downstream buyers grew more cautious, and with limited new orders, spot trading volumes declined noticeably. When copper prices were relatively lower later, trading volumes picked up, but the recovery was constrained by high premiums and the consumption off-season. Overall, last week's spot trading volumes in China's refined copper market edged up slightly week on week.
According to Mysteel's survey of 56 Chinese refined copper trading enterprises (including smelters, traders, and downstream processors), the weekly transaction volume during July 20-24 increased by 5.73% or 5,362 tonnes compared with the previous week, reaching 98,974 tonnes.
Looking ahead, as the month-end nears, downstream raw material procurement demand is expected to slow, so spot trading volumes in the refined copper market are unlikely to improve further. However, if copper prices fall more than expected, spot trading volumes could still have room to rise sharply, as prices still significantly sway spot transactions.
Inventory: China's refined copper retail and bonded inventories both decrease WoW
China's refined copper retail inventory fell then rose slightly last week. Limited smelter shipments kept spot supply persistently tight, and downstream buying sentiment at lower prices was reasonably firm, so China's refined copper retail inventory had remained on a week-on-week decline as of July 23. However, due to imported copper arrivals and slower trading driven by mid-week price gains, inventory on July 23 increased compared with July 20. Looking ahead, while smelter shipments are expected to stay limited in the near term, imported copper arrivals are likely to increase, and downstream procurement demand is expected to slow as the month-end approaches. As a result, China's refined copper retail inventories are likely to edge up slightly this week.
China's refined copper bonded inventory declined week on week last week. The main reason was that previously favorable import profit led to the gradual customs clearance and import of cargoes from some warehouses into the domestic market. Looking ahead to this week, some bonded warehouse cargoes still have plans for customs clearance and import into domestic market, so China's refined copper bonded inventory are expected to continue to decline.
The weekly average spread between the main COMEX and LME copper contracts was up by $15.08/tonne week on week to $411.17/tonne last week. The average LME cash-3M copper contract settlement spread was $11.2/tonne last week, up by $56/tonne week on week. As COMEX copper traded still at a premium, 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. In addition, the LME copper cash-to-three-month spread turning from negative to positive could further dampen delivery appetite and suppress LME inventory.
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!
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Written by Zhaorui Cui, cuizhaorui@mysteel.com
Edited by Mingyuan Wang, wangmingyuan@mysteel.com
