The proportion of 2026 copper cathode long-term contracts has declined significantly compared with previous years, fundamentally reshaping global physical copper trade flows. With fewer volumes locked in under long-term agreements, a larger share of material is now exposed to the spot market, increasing pricing volatility and distribution uncertainty.
At the same time, African and South American cargoes are being offered at relatively high premiums, reflecting earlier tightness in supply expectations and competition for resources. However, the macro backdrop has shifted. Global visible inventories have expanded substantially, with stocks building across the SHFE, LME, and COMEX systems. All three exchanges are currently in contango structures, indicating ample near-term supply and limited spot tightness.
Against this backdrop, spot premiums remain subdued, and arbitrage-driven trade flows have weakened. The combination of elevated upstream offer levels and soft spot fundamentals has made it increasingly difficult for traders to identify attractive end markets. With import and export windows largely closed and regional price spreads narrowing, physical arbitrage opportunities have become limited.
Market participants note that, under current pricing conditions, unsold cargoes are likely to accumulate as “implicit inventories” in regions such as Africa, South America, and Southeast Asia, including port and bonded-zone stocks that are not immediately reflected in exchange data.
Looking ahead, if copper prices remain at current elevated levels while exchange inventories continue to build, spot premiums are likely to face downward pressure. Without a meaningful improvement in end-user demand or a visible tightening in supply, the physical market may remain weak, with premiums proving easier to decline than to rise in the near term.
