Premium: Tight supply leads to falling inventory and rising spot premiums
Last week, available refined copper from holders and smelters was limited. Although some imported copper arrived, it was mostly non-registered and non-standard brands and insufficient to cover the spot shortage. Meanwhile, copper prices fell early last week, prompting concentrated bargain restocking. As a result, amid tight supply and moderate trading volumes, China's refined copper retail inventories declined, lending some support to spot premiums.
Data Source: Mysteel
Looking ahead to this week, with the Mid-Autumn Festival and National Day holidays approaching, downstream firms may need to stock up on raw materials, so consumption is expected to remain resilient. Coupled with little improvement expected on the supply side, refined copper spot premiums are likely to stay elevated in the near term. According to Mysteel, refined copper spot premium ranges are forecast with Guangdong at Yuan 600/tonne to Yuan 1,100/tonne, Tianjin at Yuan 400/tonne to Yuan 700/tonne, and Chongqing at Yuan 100/tonne to Yuan 500/tonne this week.
Supply: Limited arrivals keep spot supply tight
China's refined copper spot supply was tight last week. By market, Shanghai saw a slight increase in arrivals due to imported copper inflows and shipments from some smelters, but overall arrivals improved only marginally because of vessel delays at ports. In Guangdong, smelter shipments remained low, keeping spot supply tight. In Tianjin, maintenance at some major smelters left regional spot supply relatively short. In Chongqing, although arrivals were limited, outbound volumes also declined, so overall spot supply was acceptable. Overall, China's refined copper spot supply improved only modestly last week. This week, domestic smelter shipments in China are unlikely to see a meaningful improvement, and imported copper inflows will also be affected by vessel delays, so refined copper spot supply is expected to remain tight overall.
Demand: Refined copper spot trading declines WoW
Spot trading volumes in China's refined copper market fell week on week last week. Although copper prices fell sharply early in the week, improving spot trading in some markets, the delivery of the 2609 contract during the week kept some companies cautious, limiting actual transaction volumes. After delivery, wait-and-see sentiment eased, but rebounding copper prices and firm spot premiums limited any recovery in trading volumes. In summary, despite the early-week price decline, weekly spot market trading volumes fell week on week. According to Mysteel's survey of 56 Chinese refined copper trading enterprises (including smelters, traders, and downstream processors), the transaction volume between September 14 and September 18 decreased by 6.58% or 7,062 tonnes compared with the previous week, reaching 100,200 tonnes. Looking ahead to this week, with China's Mid-Autumn Festival and National Day holidays approaching, downstream companies are expected to start raw material restocking, so spot consumption is likely to remain resilient. However, the near-term rebound in copper prices will also weigh on downstream purchasing appetite. As a result, refined copper spot trading volumes are expected to experience limited changes this week, depending on the tug-of-war between copper prices and restocking demand.
Import: Import arbitrage improves with foreign trade activity improving
Early last week, as copper prices fluctuated at home and abroad, China's refined copper import ratio improved and import profits were relatively attractive. As a result, spot trading activity in the import market increased, and B/L cargoes traded quickly, leaving market supply tight and boosting the Yangshan copper premium. Going forward, as copper prices rebound, China's refined copper import trade has returned to losses, so trading in China's import market is expected to slow. As for the Yangshan copper premium, short-term delays in arriving import vessels have limited available spot volumes, so the premium is expected to remain firm.
Data Source: Mysteel
Inventory: China's refined copper retail and bonded inventory both decline WoW
China's refined copper retail inventory fell last week. Although imported copper arrived in some markets, domestic supply arrivals remained limited. Falling copper prices also boosted downstream bargain purchasing, and outbound volumes from some warehouses were decent, leading to lower inventory. This week, with China's Mid-Autumn Festival and National Day holidays approaching, downstream companies are expected to continue restocking. With some imported cargoes delayed at ports and thus limited room for imported copper replenishment, coupled with expected limited shipments from domestic smelters, China's refined copper retail inventory is expected to continue falling.
China's refined copper bonded inventory declined slightly week on week last week. As cargoes from some bonded warehouses continued to be exported overseas, bonded zone inventory still fell week on week even as planned export cargoes from domestic smelters arrived gradually. Looking ahead, as the import window has opened intermittently recently, some bonded warehouse cargoes may gradually enter China's domestic market, so bonded zone inventory is expected to continue declining in the short term.
Data Source: Mysteel
The weekly average spread between the main COMEX and LME copper contracts was down by $126.91/tonne week on week to $162.92/tonne last week. The average LME cash-3M copper contract settlement spread was -$106/tonne last week, down by $48.3/tonne week on week. As the COMEX-LME refined copper price spread narrowed, COMEX refined copper inventory growth slowed and some refined copper even flowed out, while LME refined copper inventory increased last week. As the COMEX copper premium weakened, some U.S. refined copper cargoes were delivered to LME warehouses in the U.S. Looking ahead, as expectations of additional U.S. tariffs on refined copper ease, the COMEX copper premium may narrow, so the flow of cargoes into North America is expected to slow and may even reverse, with material likely starting flowing back from North America to other markets.
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
