Spot supply is tight in stages as demand heats up, and imported copper premiums shot up rapidly this week [SMM Yangshan Copper Weekly Review]

This week (September 14-September 18), the weekly average transaction price range for Yangshan copper premium warrants was $108-121/mt, QP October, with an average price of $115/mt; the weekly average transaction price range for B/L was $106-117/mt, QP October, with an average price of $111/mt; EQ copper CIF B/L was $59-69/mt, QP October, with an average price of $64/mt. As of September 18, the SHFE/LME copper price ratio for LME copper against the SHFE copper 2610 contract, excluding exchange rates, was 1.1305, with an import loss of approximately 963.35 yuan/mt, widening by about 595 yuan/mt WoW. As of Friday, the backwardation structure of the LME copper October date contract widened WoW, with a backwardation structure between the October date and November date contracts, and a carry spread of $8.88/mt. Currently, mainstream offers for ER registered copper B/L are around $110-120/mt; mainstream offers for ER registered copper warrants are around $130-140/mt; mainstream offers for EQ copper are around $60-75/mt.

During the week, spot premiums for imported copper shot up sharply, with registered ER warrants seeing particularly notable gains. At the start of the week, the SHFE/LME price ratio recovered significantly from prior levels, LME near-month contracts shifted to a contango structure, and the pullback in copper prices clearly warmed up market demand. Meanwhile, due to ongoing congestion at Chinese ports, domestic copper cathode inventories remained low and supply was tight, with near-port cargoes almost completely swept up in a short period. Suppliers held back from selling and held prices firm, driving spot premiums up rapidly. Although the SHFE/LME price ratio pulled back at the end of the week and the LME structure reversed again, offers remained firm as downstream buyers still had rigid demand ahead of the holiday and market supply was constrained.

According to SMM, as of Thursday this week (September 17), copper inventories in domestic bonded zones decreased by approximately 4,300 mt from the previous period (September 10) to 34,500 mt. Among them, Shanghai bonded inventories decreased by 4,100 mt to 31,600 mt, and Guangdong bonded inventories decreased by 200 mt to 2,900 mt. This week, bonded zone inventories saw significant destocking, mainly due to moderate downstream demand leading to cargo pick-up, with increased shipments from bonded zones, which was in line with the rapid rise in warrant premiums.

Looking ahead, port congestion is not yet over in the short term, and domestic inventories remain low. The logic of tight market supply is expected to persist, and with downstream stockpiling demand building ahead of the long holiday, periodic shortages will provide support for spot premiums. In addition, the recent narrowing of the price spread between COMEX and LME has weakened the North American siphon effect, and the circulation of COMEX registered copper brands warrants continued attention.