[Weak Supply and Demand for Imported Spot Copper, Sluggish Market Performance This Week - SMM Yangshan Copper Weekly Review]

This week (September 21-September 24), the weekly average transaction price range for Yangshan copper premium warrants was $111-124/mt, QP October, with an average price of $118/mt; the weekly average transaction price range for B/L was $105-120/mt, QP October, with an average price of $112/mt; EQ copper CIF B/L was $46-60/mt, QP October, with an average price of $53/mt. As of September 24, the SHFE/LME copper price ratio for LME copper against the SHFE copper 2610 contract, excluding exchange rates, was 1.1257, with an import loss of around 1,399.64 yuan/mt, expanding by about 436 yuan/mt WoW. As of Thursday, the backwardation structure of the LME copper October date contract widened WoW, with the carry spread between the October date and November date contracts at $40.69/mt.

This week, spot premiums for imported copper remained relatively stable, while market activity was sluggish. During the week, the SHFE/LME price ratio pulled back, LME near-month contracts shifted back into a backwardation structure, and import losses widened. However, available spot imported copper supply in the market was limited, with cargoes near ports hard to find. As a result, spot offers held firm, while trading activity remained sluggish. Meanwhile, domestic spot copper cathode premiums against the SHFE copper 2610 contract shot up sharply; copper inventories in major regions across China fell to around the 1% percentile of the past year, with smelters holding scarce available supply and already showing overselling. Surveys indicate that smelters with copper concentrate processing trade with imported materials manuals and export qualifications have not yet shown significant export activity.

According to SMM, as of Thursday this week (September 24), domestic bonded zone copper inventories decreased by about 6,500 mt WoW from the previous period (September 17) to 28,000 mt. Among them, Shanghai bonded zone inventory decreased by 6,000 mt WoW to 25,600 mt, and Guangdong bonded zone inventory decreased by 500 mt WoW to 2,400 mt. This week, bonded zone inventories continued to draw down, mainly due to downstream restocking for essential pre-holiday demand and cargo pick-up, with increased shipments from bonded zones. This was also in line with the firm performance of Yangshan bonded warrant premiums.

Looking ahead, with the Mid-Autumn Festival and National Day holidays approaching, only three trading days remain next week. Short-term available spot imported copper supply is expected to remain tight, and suppliers are likely to maintain a firm stance on prices. Meanwhile, the backwardation structure is making downstream buyers cautious about high prices, so the market is expected to be driven mainly by essential restocking demand.