This week (August 17–August 20), the weekly average price range for Yangshan copper premiums on warrants settled at $76–96/mt, QP September, with an average of $86/mt; the weekly average price range for B/Ls settled at $76–86/mt, QP September, with an average of $81/mt; EQ copper CIF B/Ls stood at $45–61/mt, QP September, with an average of $53/mt. As of August 20, the SHFE/LME copper price ratio (ex-exchange rate) for LME copper against SHFE copper September 2609 contract was 1.1306, with an import loss of about -694.8 yuan/mt, narrowing by around 309 yuan/mt WoW. As of Thursday, the LME copper September date backwardation structure narrowed WoW, with the swap fee difference between September date and October date at −46.25 $/mt. Currently, mainstream offers for ER registered copper B/Ls were around $95/mt; mainstream offers for registered copper warrants were around $95–100/mt; mainstream offers for EQ copper B/Ls were around $45–60/mt.
At the start of the week, LME copper experienced a squeeze, with copper prices shooting up on the delivery day and the LME backwardation structure rising to a high level, leading market participants to mostly wait and see. Subsequently, LME saw concentrated deliveries during the week, driving inventory up rapidly. Copper prices pulled back, the import price ratio recovered, the export window closed, and the LME copper near-month backwardation structure converged. In the spot market, buyers and sellers continued to grapple, with divergent transactions: downstream mainly engaged in just-in-time procurement, with some cargoes that had already arrived or were about to dock seeing low-priced transactions, while suppliers of forward cargoes quoted relatively firm prices.
According to SMM, as of this Thursday (August 20), China's bonded zone copper inventories increased by about 1,600 mt WoW from the previous period (August 13) to 36,800 mt. Among them, Shanghai bonded inventory increased by 2,500 mt WoW to 33,600 mt, while Guangdong bonded inventory decreased by 900 mt WoW to 3,200 mt. The increase in bonded zone inventory was mainly due to: 1. The export window had opened earlier, and some exported copper cathode continued to arrive at bonded zones; 2. A small amount of B/Ls arrived at ports and flowed in.
Looking ahead, US tariffs have seen no substantial progress. Given LME's high backwardation structure triggering massive concentrated deliveries, expectations exist for further recovery in the import price ratio. Attention should be paid to the short-term spot supply of registered copper, and ongoing congestion at Shanghai port may provide support for the downside of imported copper premiums. However, the recovery of domestic demand still awaits observation, and short-term divergence between upstream and downstream is likely to persist.
