Historical Discount in the 2024 COMEX Copper Market: How Will It Unfold in the New Year? [SMM Analysis]

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        Reviewing 2024, the US dollar copper market experienced fluctuations. By the end of trading on December 31, 2024, the annual average Yangshan copper premiums for warehouse warrants stood at $38.36/mt, while the average for B/L was $37.47/mt. What changes occurred over the past year? What can be expected in the new year? The following provides a detailed analysis.

        Reviewing 2024, Yangshan copper premiums first declined and then rebounded. At the beginning of the year, the market was optimistic about the SHFE/LME price ratio, with a large number of arbitrage positions and an influx of imported copper into the domestic market. By mid-year, copper prices surged, and import profits once dropped to -2,000 yuan/mt. During this period, the domestic market exhibited a high contango and significant discounts, with high inventory levels leading to a weak US dollar copper market and Yangshan copper premiums reaching a historic discount. Meanwhile, domestic smelters actively exported, with June 2024 setting a record for the highest monthly export volume. Following significant inventory buildup on the LME, a high contango structure emerged, reducing the holding costs of US dollar copper. As copper prices pulled back, domestic consumption gradually recovered, and factors such as the substitution effect of refined and scrap copper became evident, leading to a gradual balance in the supply and demand of the US dollar copper market. By year-end, the new export tax rebate policy for copper semis was introduced, highlighting the advantages of bonded warehouse warrants, which rapidly widened the price spread with B/L.

        Regarding EQ copper, the share of imported copper from major non-registered regions exceeded 60% in 2024, and EQ copper prices showed significant elasticity throughout the year. Particularly during the mid-year period of substantial import losses, EQ copper prices once dropped to a discount of nearly $100/mt. Nevertheless, the annual average price spread between EQ copper and long-term contract prices was still smaller than that between registered copper and long-term contract prices.

        Looking ahead to 2025, the fixed prices for long-term contracts of registered and EQ copper in the US dollar copper market are expected to show little fluctuation compared to 2024, with a slight increase in the proportion of floating prices. As raw material supply tightens at ports and copper semis exports create rigid demand for imported copper cathode, the supply and demand fluctuations in the US dollar copper market in 2025 are expected to be more frequent than in 2024. Additionally, factors such as adjustments in international interest rate cycles, tariff policies on China under the Trump administration, and regional logistics disruptions will impact overseas supply structures and the RMB exchange rate, leading to greater instability in 2025. The US dollar copper market will face both opportunities and challenges.

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