Copper prices fluctuated significantly last week. Spot premiums/discounts in Shandong also increased, and this week marks the Mid-Autumn Festival holiday. Here are the supply and demand conditions for copper cathode and the trend of premiums/discounts in Shandong.
Affected by concerns about the US economic situation, copper prices began to fall on Tuesday and then exhibited wide fluctuations. The most-traded SHFE copper contract hovered around 72,000 yuan/mt. From the supply side, due to the decline in copper prices, smelters' willingness to sell decreased, and they raised premiums. It is understood that some smelters have reduced production due to tight raw material supplies. After the price drop, smelters tightened shipments, leading to a tight supply in the spot market. From the consumption side, after the price drop, many downstream processing enterprises restocked at lower prices. The procurement demand in Shandong and surrounding areas performed well, driving spot premiums/discounts higher.
Looking ahead, according to SMM, a large smelter is expected to undergo maintenance in October. To ensure long-term supply agreements, the overall shipment volume in September will decrease. Combined with production cuts at some smelters, the supply of copper cathode in Shandong is expected to remain tight in the short term. However, caution is required as suppliers in North China may resume normal production after maintenance and gradually deliver copper cathode to Shandong. From the consumption side, with September entering the traditional consumption peak season, procurement demand is expected to gradually increase. Enterprises need to replenish inventories before the National Day holiday, and consumption is expected to continue improving. Overall, with tight supply and improving consumption, the potential for spot premiums/discounts to continue rising in Shandong is significant.


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