This week, SHFE copper spot premiums retreated from highs. At the start of the week, available supply was tight, and the backwardation between prompt and next-month contracts stayed high, prompting suppliers to hold prices firm. Spot premiums averaged 610 yuan/mt, hitting a new high for the year. Subsequently, some imported cargoes that had been delayed by port congestion gradually entered the market, easing the tight supply. Meanwhile, copper prices stayed high, and downstream acceptance of elevated premiums declined. The widening backwardation further boosted suppliers' willingness to sell, and average premiums pulled back to 265 yuan/mt by Thursday. On the inventory front, as of September 3, SMM recorded social inventory in Shanghai at 55,500 mt, down 11,000 mt WoW from Monday. Inventory in Jiangsu stood at 23,200 mt, up 3,200 mt WoW. Combined destocking across the two east China regions totaled 7,800 mt.
Looking ahead to next week, SHFE copper spot premiums are expected to consolidate. The rapid decline in Shanghai inventory, driven mainly by increased dip-buying from downstream after copper prices and premiums pulled back, along with limited recent arrivals, provides support beneath spot premiums. Jiangsu, by contrast, saw inventory buildup as cargoes from some smelters arrived, highlighting regional supply divergence. On the supply side, some imported cargoes have already arrived at ports, but the scale of further replenishment still needs monitoring. If arrivals continue to increase, the tight supply in Shanghai may ease further. On the demand side, downstream purchases remain largely dip-buying for immediate needs, and high copper prices will continue to curb willingness to chase prices. At the same time, the backwardation between prompt and next-month contracts remains elevated. If it widens further, suppliers' willingness to sell may strengthen. Overall, low inventory in Shanghai supports premiums, but imported replenishment, elevated backwardation, and insufficient demand sustainability remain headwinds. Spot premiums for SHFE copper against the 2609 contract are expected to hold next week, with the overall center likely consolidating at lows.
