Mediocre demand, downstream fear of high prices, divergence between buyers and sellers, imported copper premium lacks upward momentum [SMM Yangshan Copper Weekly Review]

This week (July 27 – July 30), the weekly average price range for Yangshan copper premiums B/L transactions was $104–$110/mt, QP August, with an average price of $107/mt; the weekly average price range for warrant transactions was $108–$117/mt, QP August, with an average price of $112/mt; EQ copper CIF B/L was $70–$80/mt, QP August, with an average price of $75/mt. As of July 30, the SHFE/LME copper price ratio for the SHFE copper 2608 contract after excluding exchange rates was 1.1345, with an import loss of approximately 528 yuan/mt, which was a narrowing of roughly 107 yuan/mt from the previous week. As of Thursday, the LME copper backwardation structure for the August date widened WoW, with the spread between the August date and the September date at -$12.94/mt. Currently, mainstream offers for ER copper B/L are around $115–$120/mt; mainstream offers for registered copper warrants are around $120–$125/mt; mainstream offers for CIF B/L EQ copper are around $75–$85/mt.

This week, Yangshan copper premiums maintained a relatively stable trend. As expectations of tight available spot supply began to weaken, premiums lacked further upward momentum. However, influenced by the persistently unfavorable SHFE/LME price ratio, mediocre downstream consumption demand, and a widened backwardation structure in near-term LME contracts, seller offers increased, yet downstream buyers remained cautious at high prices and stayed on the sidelines. Both parties held divergent positions, leading to a further stalemate throughout the week, resulting in sluggish actual transactions.

According to SMM, as of Thursday this week (July 30), China's bonded zone copper inventories decreased by approximately 100 mt MoM from the previous period (July 23) to 37,100 mt. Among these, Shanghai bonded inventories increased by 100 mt MoM to 33,400 mt, and Guangdong bonded inventories decreased by 200 mt MoM to 3,700 mt. Bonded zone inventory showed minimal destocking changes, with both warehouse inflows and warehouse withdrawals remaining low during the week.

Looking ahead, overall market supply will remain constrained due to the sustained siphoning effect from North America. However, the market situation is expected to tighten further entering August. Cargoes previously canceled from LME Asian warehouses and shipped to China will arrive at ports in batches gradually during August. If consumption fails to show a significant improvement, the import SHFE/LME price ratio will struggle to rebound, and short-term supply growth could impact spot premiums.