Tight supply drives premiums up past 1,000; premiums pull back as pre-holiday stockpiling cools [SMM Shanghai spot copper weekly review]

This week, SHFE copper spot premiums rose initially before pulling back, remaining at elevated levels overall. At the start of the week, inventory in the Shanghai region dropped sharply, available supply was tight, and some downstream enterprises began pre-holiday stockpiling. Suppliers raised quotes consecutively, with the average premium of SMM #1 copper cathode against the SHFE copper 2610 contract rising from 825 yuan/mt on Monday to 1,375 yuan/mt on Tuesday. Subsequently, copper prices, spot premiums, and the backwardation spread between futures contracts all remained at high levels, reducing downstream acceptance of high-priced cargoes. Some suppliers increased shipments and lowered quotes, with the average premium pulling back to 1,315 yuan/mt by Thursday. On the inventory front, social inventory in the Shanghai region stood at 46,300 mt on September 24, up 2,400 mt from Monday. Jiangsu region recorded 18,200 mt, down 2,400 mt from Monday. Combined inventory across the two east China regions was basically flat.

Looking ahead to next week, SHFE copper spot prices are expected to remain at a premium, though the center may edge lower. Supply side, absolute inventory levels in Shanghai remain low, and some mainstream cargoes are in tight circulation, providing support for premiums. However, previously locked-in imported cargoes are gradually arriving at ports. If these continue to flow into the spot market, the supply tightness is expected to ease. Demand side, some downstream enterprises have largely completed pre-holiday stockpiling, and purchasing sentiment cooled notably on Thursday. Combined with high copper prices and high premiums raising procurement costs, room for further restocking is limited. Meanwhile, the elevated backwardation spread increases suppliers' position-rolling costs, and high premiums also strengthen the willingness to sell. Overall, low inventory will continue to support spot premiums, but as stockpiling demand weakens, arrivals supplement supply, and supplier shipments increase, SHFE copper spot premiums against the 2610 contract are expected to continue pulling back slightly next week. Attention should be paid to actual inflows of imported copper and remaining downstream restocking demand.