Destocking combined with typhoon stockpiling, Shanghai spot copper premiums hit a new high for the year [SMM Shanghai Spot Copper Weekly Review]

This week, social inventory of copper cathode continued to decline. Available cargoes were tight, and typhoon expectations disrupted downstream logistics and production arrangements, prompting some downstream enterprises in Jiangsu and Zhejiang regions to stockpile in advance. This drove the center of SHFE copper spot premiums to shift upward continuously, peaking near 150 yuan/mt during the week and hitting a new high for spot premiums this year. SMM data showed that social inventory in Shanghai recorded 104,800 mt, down 21,700 mt from last Thursday; inventory in Jiangsu recorded 31,000 mt, down 5,200 mt from last Thursday. Inventories in both regions continued to decline, providing strong support to spot premiums.

Next week, SHFE copper spot premiums are expected to continue to hold up well. Supply side, rapid inventory destocking combined with tight available spot supply has weakened suppliers’ willingness to sell at low prices. The inter-month spread shifted to backwardation, also supporting spot premiums. Although the import window has opened, short-term import growth is limited considering logistics and customs clearance delays. Demand side, advance stockpiling driven by typhoon expectations may persist, but as premiums rise rapidly, downstream willingness to chase higher prices may weaken. Overall, SHFE copper spot prices against the 2607 contract are expected to remain at a premium, holding up well overall. However, further upside room will depend on the sustainability of downstream stockpiling and the inflow of imported cargoes.