Premium: Tight refined copper supply drives spot premiums higher
China's refined copper prices and spot premiums rose last week. Higher prices suppressed spot trading, while typhoon disruptions limited inflows of imported copper, and some domestic smelters continued to export, curbing domestic supply. As a result, market supply tightened and holders showed strong willingness to support prices, pushing spot premiums higher.
Looking ahead, as port operations return to normal, some previously delayed import cargoes are expected to arrive. However, with import arbitrage deteriorating, volumes are expected to be limited. Meanwhile, smelter shipments are likely to remain limited. Spot supply is therefore expected to stay tight in the near term, keeping spot premiums at elevated levels. According to Mysteel, refined copper spot premium ranges are forecast with Guangdong at Yuan 120/tonne to Yuan 220/tonne, Tianjin at Yuan 200/tonne to Yuan 380/tonne, and Chongqing at -Yuan 100/tonne to Yuan 200/tonne this week.
Data Source: Mysteel
Supply: Arrivals of imported and domestic copper both stay limited
China's refined copper spot supply was tight last week. In Shanghai, port congestion and typhoon disruptions delayed arrivals of imported copper, while some local smelters planned to export output, limiting spot availability. In Guangdong, concentrated exports by some smelters and the diversion of material to regions with higher spot premiums further tightened supply. In Tianjin, supply was constrained by annual maintenance at a main smelter and the redirection of cargoes to East China. Looking ahead, as import arbitrage deteriorates and the export window opens, arrivals of both imported and domestic copper are expected to remain limited, keeping China's refined copper spot supply tight in the near term.
Demand: High copper prices depress spot trading
China's refined copper spot trading volume declined last week. High copper prices slowed essential procurement by downstream users. Meanwhile, tight supply pushed spot premiums higher, further dampening downstream demand. In addition, end-use consumption had yet to recover visibly, limiting restocking demand from downstream processors. As a result, spot trading sentiment in China's refined copper market was subdued last week. According to Mysteel's survey of 56 Chinese refined copper trading enterprises (including smelters, traders, and downstream processors), the weekly transaction volume during August 24-28 decreased by 4.38% or 4,677 tonnes compared with the previous week, reaching 102,145 tonnes. Looking ahead, near-term bearish macro factors may push copper prices slightly lower, and with the consumption peak season gradually approaching, spot trading volume in the refined copper market is expected to improve.
Import: China's refined copper import losses widen
Driven by fluctuations in domestic and overseas copper prices, China's refined copper import ratio edged down last week, and import trade remained at a substantial loss. As a result, market sentiment stayed cautious and actual transactions remained thin. Meanwhile, Amid weak market demand, refined copper warehouse receipt and bill of lading premiums at Shanghai Yangshan Port both declined week on week. Looking ahead, China's refined copper import trade is expected to slow in the near term, weighed down by a weakening import arbitrage.
Inventory: China's refined copper retail inventory declines
China's refined copper retail inventory declined week on week last week. On one hand, as some smelters continued to export, the volume of refined copper shipped to the domestic market remained limited. On the other hand, due to deteriorating import arbitrage and typhoons, the amount of imported copper cleared into China's domestic market was also relatively small. As a result, refined copper retail inventory fell. However, high copper prices during the week slowed downstream consumption, and warehouse outflows were moderate, limiting the decline. This week, imported copper inflows are expected to remain low, and arrivals of domestic material are unlikely to increase significantly. Market supply should therefore remain tight, and China's refined copper retail inventory is expected to continue drawing down.
China's refined copper bonded inventory saw limited change last week. During the week, some cargoes planned for export by smelters were gradually moved into bonded zones, with inventory first increasing and then declining as some copper was also shipped to overseas warehouses. This week, with some port operations suspended due to extreme weather and expectations of both inflows and outflows in bonded zones, refined copper bonded inventory in China is expected to remain little changed.
The weekly average spread between the main COMEX and LME copper contracts was down by $16.80/tonne week on week to $505.70/tonne last week. The average LME cash-3M copper contract settlement spread was $166.8/tonne last week, down by $100.3/tonne week on week. As COMEX copper traded still at a premium, COMEX copper inventory kept increasing last week. Meanwhile, the rapid narrowing of the LME copper backwardation spread after futures delivery, along with the COMEX copper premium, led to a decline in LME copper inventory. 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.
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
