Buyers and sellers remain locked in a tug-of-war, spot market activity sluggish [SMM Yangshan Copper Weekly Review]

This week (August 31-September 4), the weekly average transaction price range for Yangshan copper premium warrants was $68-79/mt, QP September, with an average price of $74/mt; the weekly average transaction price range for B/L was $66-80/mt, QP October, with an average price of $73/mt; EQ copper CIF B/L was $34-50/mt, QP October, with an average price of $42/mt. As of September 4, the SHFE/LME copper price ratio excluding exchange rate for the SHFE copper 2609 contract against LME copper was 1.1334, with an import loss of around 374.51 yuan/mt, narrowing by about 1,526 yuan/mt WoW. As of Friday, the September date backwardation structure for LME copper narrowed significantly WoW, with the carry spread between September and October dates at -$14.81/mt. Currently, offers for ER registered copper B/L are scarce in the market; mainstream offers for ER registered copper warrants are around $90-100/mt; mainstream offers for EQ copper are around $50-60/mt.

During the week, LME copper prices weakened due to overseas macro factors, the export window closed, and although the SHFE/LME price ratio continued to recover, it still had not returned to profitable territory. The LME backwardation structure gradually converged, but spot market activity remained sluggish. As LME continued to show a backwardation structure, prices for September-date and October-date cargoes diverged, while changes in the price ratio and structure kept most market participants in a strong wait-and-see stance. Meanwhile, domestic port congestion persisted, and suppliers showed little willingness to offload cargoes, while downstream actual demand remained sluggish. Buyers and sellers continued their standoff, with overall actual transactions limited.

According to SMM, as of Thursday this week (September 3), domestic bonded zone copper inventories increased by about 2,100 mt WoW from the previous period (August 27) to 40,600 mt. Among them, Shanghai bonded zone inventories increased by 2,500 mt to 38,100 mt, while Guangdong bonded zone inventories decreased by 400 mt to 2,500 mt. The recent sustained increase in Shanghai bonded zone inventories was mainly due to the previously opened export window, with some exported copper cathode continuing to enter warehouses, while shipments also declined.

Looking ahead, low inventories in both LME and domestic markets, spot-futures backwardation structures, and downstream consumption demand will become the core factors driving market changes. Against the backdrop of unresolved US tariffs, the tight copper supply logic outside North America persists, and the backwardation structure is expected to repeatedly keep market sentiment cautious, with poor market liquidity presenting a weak supply-demand pattern in the short term.