Shanghai Spot Copper Premiums Retreat after Rapid Rise Amid Low Inventory and High Copper Prices [SMM Shanghai Spot Copper Weekly Review]

This week, Shanghai spot copper premiums moved higher before pulling back. At the start of the week, Shanghai social inventory was at low levels, available cargoes were tight, and coupled with the inter-month backwardation structure support, low-priced cargoes were hard to find. The premium center continued to rise, refreshing the year-to-date high. After mid-week, as SHFE copper prices rose further, both copper prices and premiums remained high, curbing downstream purchases. Some processing enterprises, affected by accumulated finished product inventories, saw plans for production cuts or phased shutdowns. Weakening end-use consumption gradually transmitted to the spot market. Meanwhile, some suppliers actively lowered prices to offload cargoes. East China inventory stopped declining and rebounded, and spot premiums pulled back under pressure. SMM data showed that on July 23, Shanghai social inventory stood at 68,300 mt, up 2,200 mt from this Monday; Jiangsu inventory stood at 22,000 mt, up 2,400 mt from this Monday, marking the first slight inventory buildup in more than three weeks.

Looking ahead to next week, Shanghai spot copper is expected to maintain its premium structure, but the center may remain under pressure. Supply side, current absolute inventory levels remain low, and available cargoes have not yet fully loosened, but east China inventory stopped declining and rebounded, and the support from low inventory for premiums is marginally weakening. In addition, SMM learned that some cargoes from LME warehouses have already been shipped to China, which are expected to arrive gradually. If arrivals increase, this may provide marginal relief to the current tight spot market. Demand side, copper prices and spot premiums are both at highs, downstream purchases are mainly for rigid demand, and the willingness to chase higher prices is insufficient. Overall, Shanghai spot copper against the SHFE 2608 contract is expected to remain at a premium next week. However, under the influence of inventory rebound, supplementary imports, and weak downstream consumption, the premium center may consolidate and pull back. Further attention should be paid to suppliers’ willingness to hold prices firm and changes in actual arrivals.