Copper prices kept increasing in China's futures and spot markets on September 1, due to limited available copper supply. Retail inventory in China stayed low and imported copper provided limited support, while tight raw materials have begun to affect domestic refined copper production. Meanwhile, prices dropped at the LME, as macro pressures persisted from expectations of a Fed interest rate raise and escalating Middle East conflicts.
China's refined copper spot trading dropped on September 1, with rising prices suppressing downstream procurement. At the same time, some imported non-registered copper arrived and supplemented supply, leading to a constrained decline in spot premiums from recent highs. In contrast, scrap trading grew. Downstream scrap processors showed stronger procurement interest as the widening price spread between refined and scrap copper has opened up profit margins for finished products. Purchasing of scrap copper raw materials was decent, though downstream processors continued to avoid building heavy inventory.
Trading in China's copper semis markets continued falling on September 1, with market sentiment generally weak amid elevated copper prices and weak demand. The rebound in China's manufacturing PMI for August may bring marginal improvement in industrial copper demand. Additionally, the new real estate credit policy, which enhances delivery mechanisms and financing structures, could provide some incremental support for medium to long-term copper demand. However, the near-term demand reality may remain subdued in the near term, with the upcoming peak season performance needing close attention.
