SHANGHAI, Aug.22 -- In early August, domestic copper prices were higher than LME copper prices, causing the SHFE/LME price ratio to increase and remain in the 7.8-8.2 range since mid August. Imports were showing signs of profitability.
Higher domestic copper prices were attributed to improving market fundamentals. Spot premiums experienced rapid increases, with prices soaring to RMB 1,000/mt. SHFE inventories dropped to 24,825 mt declining for the 5th week in a row, indicating tight supply. Decreases of output at copper smelters during July and August improved market sentiment.
According to the National Bureau of Statistics, China's output of refined copper was 330 kt during July, down 0.3% MoM. The current CBI survey reveals that the overall operating rate at 22 major domestic copper smelters (total capacity: 3.925 million mt) was 78.9% during August, down by 4.5% from 83.4% in July. Eight copper smelters reduced output by 5%-80%, with most small and medium-size smelters. Those smelters were using both scrap and crude copper as raw materials, and were operating at low rates due to losses from higher raw material prices. Production remained stable at smelters with copper concentrate as the raw material, but some in Shandong and Jiangxi province were affected by tightening electricity power supply.
(Edited by CBI China)