Premium: Limited supply improvement keeps refined copper spot premiums firm
Refined copper spot premiums in some Chinese markets pulled back gradually from highs during last week, but overall spot premiums remained at relatively elevated levels. In the Shanghai market, for example, the backwardation in nearby SHFE copper contracts widened, together with increased arrivals of imported copper during the week, encouraging some holders to sell at lower prices. As a result, refined copper spot premiums in Shanghai continued to decline, and the Shanghai-Guangdong cross-regional price spread also narrowed rapidly. However, because arrivals of domestically produced refined copper in China remained limited and downstream buying interest stayed relatively firm when copper prices were lower, China's refined copper retail inventory continued to fall, providing some support to spot premiums.
Looking ahead, domestic refined copper arrivals are expected to remain limited due to maintenance and export plans, while low inventories should also strengthen holders' willingness to hold prices firm. Therefore, China's refined copper spot premiums are likely to remain at high levels in the near term. According to Mysteel, refined copper spot premium ranges are forecast with Shanghai at Yuan 150/tonne to Yuan 300/tonne, Guangdong at Yuan 160/tonne to Yuan 300/tonne, Tianjin at Yuan 0/tonne to Yuan 120/tonne, and Chongqing at Yuan 0/tonne to Yuan 200/tonne this week.
Data Source: Mysteel
Supply: Imported copper arrivals fail to ease spot tightness
China's refined copper spot supply improved only marginally last week. By market, in Shanghai, some cargo delayed by earlier typhoon weather gradually flowed in during the week, but with port congestion still present, arrivals of imported copper remained limited. Combined with still-low arrivals of domestic material, spot supply in the market stayed tight. In Guangdong, concentrated exports by some smelters reduced refined copper shipments to the domestic market. In Tianjin, refined copper spot supply remained constrained by maintenance at a main smelter and by some holders shipping to East China in pursuit of higher profits. In Chongqing, although smelter shipments were also low, spot tightness eased slightly as long-term contract delivery fell sharply. Overall, China's refined copper spot supply remained tight last week. Looking ahead, due to maintenance and export plans, domestic smelters are expected to keep sending limited refined copper to the market, and imported copper arrivals are expected to remain limited, so China's refined copper spot circulation will likely stay tight in the near term.
Demand: Refined copper spot trading volume declines WoW
China's refined copper spot trading volume declined last week. Although copper prices fell at times during the week and purchasing interest picked up somewhat at the start of the month, the overall copper price level remained high, which constrained actual procurement by downstream and end-user manufacturers. In addition, with spot supply tight and inventory low, holders' firm pricing kept spot premiums elevated, further dampening purchasing demand. Moreover, there was no clear sign of a recovery in market consumption, and increases in enterprises' orders on hand were limited. For these reasons, consumption in China's refined copper spot market slowed last week. According to Mysteel's survey of 56 Chinese refined copper trading enterprises (including smelters, traders, and downstream processors), the weekly transaction volume between August 31 and September 4 decreased by 2.42% or 2,469 tonnes compared with the previous week, reaching 99,676 tonnes. Looking ahead, copper prices and spot premiums are unlikely to fall substantially in the near term given the support from tight supply, and a recovery in market consumption will take some time. Therefore, spot trading volumes are unlikely to improve significantly in the near term.
Import: Sustained import losses keep import trade sluggish
China's refined copper import ratio recovered somewhat at times last week, but the overall import trade remained loss-making, which weakened importers' buying appetite. Persistent port congestion added further pressure. These factors combined kept sentiment in China's refined copper import trade subdued last week. With transaction activity low, warehouse warrant and bill of lading premiums for refined copper at Shanghai Yangshan Port fell week on week, even though the number of arriving vessels was relatively limited. Looking ahead, China's refined copper imports are expected to edge up slightly in the near term as previously delayed shipments are unloaded, but are likely to slow thereafter amid sustained import losses.
Inventory: China's refined copper retail inventory declines further
China's refined copper retail inventory declined last week. Limited arrivals of domestic material, affected by smelters' planned exports and maintenance, remained the main reason. Although vessels delayed earlier gradually discharged and flowed into the domestic market, the growth was relatively limited. In addition, downstream enterprises showed decent buying interest in raw materials when prices were low. Overall, China's refined copper retail inventory maintained a downward trend. Looking ahead, although some imported copper arrivals are still expected, volumes are likely to be relatively limited, and domestic smelter deliveries are unlikely to improve significantly in the near term, so inventory is expected to keep drawing down in the short term. However, with consumption constrained by high copper prices and high spot premiums, the pace of destocking is expected to be relatively limited.
China's refined copper bonded inventory changed little last week. On one hand, some domestic smelter cargoes were gradually delivered into bonded zones. On the other hand, some bonded-zone material was exported overseas. With inflows and outflows largely offsetting each other, overall inventory saw limited change. Looking ahead, due to slow port efficiency, warehouse outflows are expected to be limited, while some smelters are expected to continue shipping to bonded zones, so China's refined copper bonded inventory is likely to edge up.
Data Source: Mysteel
The weekly average spread between the main COMEX and LME copper contracts was down by $148.27/tonne week on week to $357.43/tonne last week. The average LME cash-3M copper contract settlement spread was $99.63/tonne last week, down by $67.18/tonne week on week. As COMEX copper traded still at a premium, COMEX copper inventory kept increasing last week. LME inventory saw little weekly change as inflows and outflows largely offset each other. 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.
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
